ANNUAL FINANCIAL REPORT Vision

2013 THE CITY OF WINNIPEG ANNUAL FINANCIAL REPORT Vision

To be a vibrant and healthy city which places its highest priority in quality of life for all its citizens. Corporate Mission

Working together to achieve affordable, responsive and innovative public service.

Table of Contents

INTRODUCTORY SECTION

Message from the Mayor...... 4 Message from the Acting Chief Administrative Officer.....6 City Council...... 9 Senior Administrators...... 9 Winnipeg’s Economic Profile...... 10 Service Highlights...... 17

FINANCIAL SECTION

Report from the Chief Financial Officer Financial Statement Discussion and Analysis...... 28 Responsibility for Financial Reporting...... 45 Auditors’ Report...... 46 Consolidated Financial Statements ...... 47 Five-Year Review...... 78

CITY CONTACT INFORMATION...... 81

Manitoba Cataloguing in Publication Data. Winnipeg (MB). Corporate Finance Dept. Annual Report. Annual Report year ends December 31. Continues: Winnipeg (Man.). Finance Dept. Annual Report. ISSN: 1201-8147 = Annual Report-City of Winnipeg. 1. Winnipeg (Man.) - Appropriations and expenditures-Periodicals. 2. Finance, Public - Manitoba-Winnipeg-Periodicals HJ9014.M36W56 352.409712743

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 3 Nuit Blanche Winnipeg, Culture Days Manitoba Winnipeg’s skyline

Portage Avenue Opening of the new WPS K-9 facility

hood streets in all parts of the city. City Council is working Message from the Mayor towards a long-term vision to move our streets from a repair deficit to a position of ongoing maintenance. With a contin- Winnipeg is a City of growth. ued focus on street renewal in our budget, we will see a no- From our economy to our popu- ticeable difference in the state of our infrastructure in only a lation, with new residential, rec- few years. reational and commercial developments taking place across the Municipal infrastructure forms the foundation of our econo- city, Winnipeg is experiencing my, and is important to residents and businesses alike, which an increasing attractiveness as a is why City Council is making record financial commitments place to live, work, play and in- to fix our streets while ensuring our property taxes remain vest. among the lowest in Canada.

In 2013, our City continued The City of Winnipeg completed several major infrastructure to achieve new milestones. Housing starts in Winnipeg ap- projects in 2013. In November, Winnipeg Transit opened a proached 4,000 units – a level we haven’t experienced in new parking and service garage, which positions our City for more than a quarter century. Total declared construction val- transit growth. In October, we celebrated the official open- ue for building permits in the City of Winnipeg reached a ing of the Disraeli Active Transportation Bridge. The Disraeli record $1.8 billion in 2013, as a result of both public and pri- Bridges project is one of the largest bridge projects in the vate investment. There is good reason for investors to look to history of the City, and was completed with the support of Winnipeg, as our city continues to rank as the most cost-com- a federal-provincial-municipal partnership. The active trans- petitive city in Western Canada as well as the U.S. Midwest. portation bridge gives cyclists and pedestrians safe and easy access between downtown and the northeast quadrant of the Renewing public infrastructure remains a key focus for the city. Also in 2013, the City wrapped up another bridge proj- City of Winnipeg. ect, with the completion of the Sturgeon Road Twin Bridges In 2013, the City of Winnipeg implemented a new, long-term across Sturgeon Creek. Winnipeg is preparing to commence plan to fix Winnipeg’s streets, sidewalks and back lanes. As another major infrastructure project, the Polo Park Area In- part of the budget process, City Council adopted a one per frastructure Improvement Project, expected to get underway cent property tax increase dedicated each year to neighbour- in 2014.

4 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Millennium Library Transcona Centennial Spray Pad

Of course, we remain committed to continue our investment collected, largely through the new curbside yard waste col- in Winnipeg’s social and recreation infrastructure. In 2013, lection program. The new, bigger recycling carts resulted in the Community Centre Renovation Fund approved nearly a Winnipeggers recycling 17 per cent more than in 2011. To- million dollars in grants to support upgrades, safety improve- gether, we are building a cleaner and more environmentally ments and repairs at 23 different community centres. City sustainable Winnipeg. Council created this fund in 2012 in order to allow commu- The winter of 2013-2014 will long be remembered for its bru- nity centres and their volunteer teams to focus on program- tal cold. As a result of extreme temperatures frost penetrated ming, as opposed to searching out ways to finance repairs. unusually deep, eight to nine feet under pavement surfaces, Renovations are also taking place on a larger scale. For each causing many water pipes in the City to freeze. Thawing wa- of the past five years, the City has invested approximately ter pipes and providing a temporary water supply to citizens $10 million to renovate and improve community centres. became a city-wide priority, with staff from every civic de- Three new spray pads were installed in the spring and sum- partment supporting this emergency effort. mer of 2013, opening water play areas at Westdale, Transco- Even on our toughest problems, we work and progress to- na and the St. James Assiniboia Centennial pool sites. While gether. Our economy is strong and growing, and there are for a number of years we had only two of these facilities, we more opportunities for businesses, job-seekers and creative now have more than a dozen of these spray pads for families people, every day. Over the past decade, our skyline and our to enjoy across Winnipeg. We continue to upgrade several horizon have brightened, as iconic reminders of our past, like civic pools and have partnered with the Province and Kins- the Union Tower and the Metropolitan Theatre have been re- men Club in 2014, to re-open the Sherbrook Pool as early as stored and new icons, like the Canadian Museum for Human late 2015. Rights, have risen. Our libraries continue to be renewed under our long-term City Council is committed to continue seeking solutions and redevelopment strategy for public libraries and in 2013 sev- creating opportunities to ensure Winnipeg remains the great- eral renovations were completed, including the St. Boniface est city in the world to live, work, play and invest. Library and the St. James Library.

2013 represents the first full year of the City of Winnipeg’s new garbage and recycling collection system. Under the new system, Winnipeggers diverted 55 per cent more waste from landfills. Approximately 23,000 tonnes of yard waste were Mayor Sam Katz

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 5 Centre Village

have more opportunities than ever before to participate and Message from share ideas: in face-to-face budget talks; on the Internet; and on the street, via our roving budget Talk Truck.

the Acting Chief Moody’s Investor Service noted, in its most recent credit review: “The city’s multi-year budget planning process has Administrative Officer helped Winnipeg post a series of positive operating outcomes. The forward looking planning has also allowed the city to plan OurWinnipeg, our City’s offi- for capital spending in advance which has assisted in keep- cial plan and 25-year blueprint ing the debt burden relatively low and stable.” Standard and for the future, is the most com- Poor’s Ratings Services, in its November 2013 review, also prehensively consultative long- made note of the City’s sound financial management. Both term plan for community de- Moody’s and Standard and Poor’s reaffirmed the City of Win- velopment ever undertaken in nipeg’s credit rating in 2013, at Aa1 and AA, respectively. Canada – having received both the Manitoba Planning Excel- Careful planning has helped us meet City Council’s goals lence Award, and the Canadian with respect to some very significant infrastructure projects Institute of Planners’ Award for over the past year. For example, in 2013, we completed the Planning Excellence. As a Public Disraeli Active Transportation Bridge project, on-time and Service, our goal in 2013 has been to help City Council and on-budget. This project, which received an Association of the community build on OurWinnipeg’s vision of social, en- Consulting Engineering Companies of Manitoba Award of vironmental, and economic sustainability. Merit, is a good example of the kind of integrated planning OurWinnipeg envisions: sound infrastructure, that provides Better planning has been crucial to the strong performance aesthetic and environmental benefits to the community as you see recorded in this Annual Financial Report, and we are a whole, achieved in a fiscally responsible way. This is, of continuing to improve our budget planning processes. For course, in the context of developing new strategies to meet the 2014 budget process, we combined tabling of the capital the City’s infrastructure needs: establishing a new Local and operating budgets, and City Council adopted both to- Street Renewal Reserve in 2013, to increase funding for the gether before year-end for the first time. For the 2015 budget renewal of local streets, lanes, and sidewalks; complemented process, we are engaging citizens and stakeholders in a new by the establishment of a new Regional Street Renewal Re- consultation process, “Our Budget Forward.” Citizens will serve, in 2014.

6 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Assiniboine Park

Canadian Library Association Book Award Event for Children’s and Teen Literature hosted by Canada Day celebrations the Millennium Library

Improving public safety is always a key concern for City The LiveSAFE program, a crime-prevention through social Council and citizens; in 2013, both the Winnipeg Police Ser- development policy, has the City working with communi- vice and the Winnipeg Fire Paramedic Service have planned ty partners to provide thousands of inner-city children and and implemented programs to enhance their service to the youth with recreation and literacy opportunities. And, we community. The WPS is moving toward a Four-District continue to work with partners in the community, and at all Model, to increase efficiencies and create a more collabora- levels of government, to find ways to help solve the problem tive working environment. This year the Police Service en- of homelessness in our city. hanced its visibility in Winnipeg schools through after-school In 2014, we are continuing to work hard to live up to Our- programs, partnered with the Winnipeg Jets to lead weekly Winnipeg’s vision: to plan effectively, work efficiently, and hockey camps for grade two and three students, held a series be ever more responsive. This past year we established 24/7 of 12 community forums for citizens, and established an offi- Facebook and Twitter coverage, and introduced a mobile app cial Twitter account. for customer service on iPhone and Android. We will keep The Winnipeg Fire Paramedic Service added eight new seeking ways to be a better and more innovative Public Ser- pumper trucks to its fleet; introduced a new baby pod, to en- vice. sure safe and warm transport of newborns to hospital; and, On behalf of the staff, I would like to thank City Council and following careful statistical analysis of its caseloads, provided citizens for the opportunity to work on your behalf over the paramedic home visits, assessments, and referrals to vulnera- past year. To the staff – I would like to say thank you for your ble individuals in the community. This program, Emergency commitment and professionalism in 2013, and for helping Paramedics in the Community (EPIC), is improving the stan- plan and deliver services vital to Winnipeggers. dard of care and significantly reducing emergency transport and health-care costs. Through our coldest winter since 1898, your dedication was evident, in keeping our streets clear, keeping transit systems OurWinnipeg, ultimately, asks us to plan for a city that not and community facilities running, providing emergency ser- only works to ensure sound infrastructure, pleasant amenities, vices, and helping citizens with frozen pipes. I am honoured public safety, and efficient services, but is also a welcoming to be serving as your Acting CAO. city for everyone. In 2013, we reorganized service areas to establish an Aboriginal Relations Division, to provide strategic leadership on programs and services to Winnipeg’s Aboriginal community. Over 400 Aboriginal youth received educational, professional development, or employment opportunities un- Deepak Joshi Acting Chief Administrative Officer der the City’s Aboriginal Youth Strategy programs.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 7 City Hall

The sun sets over Provencher Bridge A hockey game near the Forks 2010–2014 13th Council of The City of Winnipeg Members and Appointments (for 2013)

Mayor Sam Katz Brian Mayes Devi Sharma Chairperson, Executive Policy st. vital ward old kildonan ward Committee Chairperson, Standing Policy Speaker of Council Secretary of Urban Aboriginal Committee on Protection and Chairperson, Governance Opportunities Community Services Committee of Council Secretary of Intergovernmental Chairperson, Mayor’s Environmental Harvey Smith Affairs Advisory Committee daniel mcintyre ward Jeff Browaty Grant Nordman Chairperson, Winnipeg north kildonan ward st. charles ward Committee for Safety Chairperson, Standing Policy Acting Deputy Mayor Thomas Steen Committee on Property and Councillor Responsible for elmwood – east kildonan ward Development Assiniboine Park Governance Deputy Speaker Chairperson, Winnipeg Housing Councillor Responsible for Councillor Responsible for Youth Rehabilitation Corporation Corporate Sponsorship and Recreational Opportunities Ross Eadie Chairperson, Mayor’s Age-Friendly and Seniors Advisory Committee Justin Swandel mynarski ward st. norbert ward Chairperson, Access Advisory John Orlikow Deputy Mayor Committee river heights – fort garry ward Chairperson, Standing Policy Scott Fielding Chairperson, Citizen Equity Committee on Infrastructure Committee st. james – brooklands ward Renewal and Public Works Chairperson, Winnipeg Police Board Michael Pagtakhan Daniel Vandal point douglas ward Jenny Gerbasi st. boniface ward Chairperson, Standing Policy fort rouge – east fort garry ward Committee on Downtown Russ Wyatt Chairperson, Winnipeg Housing Development, Heritage and transcona ward Steering Committee Riverbank Management Chairperson, Standing Policy Paula Havixbeck Committee on Finance charleswood – tuxedo ward Chairperson, Alternate Service Councillor Responsible for Delivery Committee Assiniboine Park Governance Secretary of Economic Development

2013 Senior Administrators

Deepak Joshi Devon Clunis Dave Wardrop Acting Chief Administrative Officer Chief, Winnipeg Police Service Director, Winnipeg Transit Mike Ruta Michael Jack Clive Wightman Chief Financial Officer Director, Legal Services/ Director, Community Services Linda Burch City Solicitor Richard Kachur Director, Corporate Support Services Brad Sacher City Clerk Mel Chambers Director, Public Works Brian Whiteside Director, Assessment and Taxation/ Diane Sacher City Auditor City Assessor Director, Water and Waste William Clark Barry Thorgrimson Acting Chief, Winnipeg Fire Director, Planning, Property and Paramedic Service Development

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 9 Winnipeg – Its People POPULATION OF THE CITY OF WINNIPEG 1989 t o 2013 720,000 and Economy 699,300 700,000

“CITY GROWTH STAYS STEADY… 680,000 Officials pleased to avoid booms and busts, but more housing needed.” 660,000

- February 9, 2012, Winnipeg Free Press 640,000 630,200 628,500 Winnipeg’s population continues to grow. In 2013, 620,000 Winnipeg’s population was 699,300 – an increase of 617,200 more than 59,000 people over the past decade. 600,000 89 91 93 95 97 99 01 03 05 07 09 11 13 Historically, Winnipeg had: Source: Statistics Canada, Demography Division • modest population growth in the late 1980s; • no population growth in the 1990s; and POPULATION FORECAST FOR THE CITY OF WINNIPEG • renewed population growth since the late 1990s. 2013 t o 2035

950,000 The primary reasons for this resumed growth are a significant 2035 909,600 increase in immigration, and a combination of fewer people 900,000

leaving and more people coming to Winnipeg from other 850,000 parts of Canada. 800,000 Over the last three years, the City has grown by about 10,000 750,000 people per year. 700,000 POPULATION FORECAST 650,000 600,000 According to the Conference Board of Canada’s August 2012 1989 617,200 Population Forecast, Winnipeg’s population is expected to 550,000 grow by 90,000 people in the next 10 years; and 205,000 89 93 97 01 05 9 13 17 21 25 29 33 people in the next 23 years. Source: Conference Board of Canada, Winnipeg Long-Term Forecast, 35 August 2012 Winnipeg’s population growth rate has increased to

1.5% recently, which is in the range of strong growth. FORECASTED AVERAGE ANNUAL POPULATION • The Conference Board forecasts this to continue in the Growth Rates of Other Cities 2014 t o 2018 short term, with an average growth rate of 1.2% over the 3.0% next five years. 2.5% The City census metropolitan area (CMA) is forecast to grow by 43,000 people by 2018. 2.5% 2.0% 2.3% 2.1% 1.9%

1.5% 1.8% 1.6%

1.0% 1.2% 1.1% 1.1% 1.0% 1.0% 0.9% 0.5% 0.6%

0.0% Halifax Regina Ottawa Calgary Victoria Quebec Toronto Hamilton Montreal Winnipeg Edmonton Saskatoon Vancouver

Source: Conference Board of Canada, Metropolitan Outlook, February 2014

10 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Nature Playground at Assiniboine Park

Pedestrians in the downtown MIGRATION (PEOPLE MOVING) NET MIGRATION Net number of people, Winnipeg CMA “Migration has become an increasingly im- 1987 t o 2035 12,000 2014 portant factor for population growth, and 2035 10,000 Forecast Winnipeg’s ability to attract new migrants 8,000 will continue to be an important determi- 6,000 nant of its future economic potential.” 4,000

- Conference Board of Canada, Winnipeg long-term forecast, 2012 2,000

People 0 Migration has been the primary factor for the increase in Winnipeg’s population. (2,000) • In 1996, Winnipeg saw a net loss of 4,600 people; but in (4,000) 2013, Winnipeg saw a net gain of 9,600 people. (6,000) 87 93 98 04 10 16 22 27 33 • With the success of the Provincial Nominee Program, 11 17 18 19 20 21 12 13 14 15 34 35

In the 1990s In the 2000s and23 24 Forecast25 26 which began in 1999, Winnipeg’s immigration has quadru- Immigrants ê Immigrants é People coming ê People coming é pled, and for 2013, we estimate 13,000 immigrants arrived People leaving é People leaving ê in the city. • Winnipeg’s immigration level is currently above the Con- Source: CANSIM, and Conference Board of Canada, Long-Term Forecast, August 2012 ference Board’s forecast. IMMIGRATION TO WINNIPEG The trends in each of the three forms of migration are: Number of people, Winnipeg CMA

• Intra-Provincial: The net number of people moving to 1998 t o 2012 the Winnipeg CMA from the rest of Manitoba has im- 14,000 proved. In 2013, Winnipeg experienced a net gain of al- 12,000 most 700 people. 10,000

• Inter-Provincial: The net number of people moving 11,100 to the Winnipeg CMA from the other provinces has im- 8,000

proved from -4,700 in 1997 to -2,800 in 2013. 6,000

• International: The net number of people moving to Immigrants Winnipeg from other countries has increased significantly, 4,000 from 2,200 in 1997 to over 11,000 in 2013. 2,000

0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Source: Citizenship and Immigration Canada, Facts and Figures 2012

12 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Outdoor movies at Memorial Park HOUSING HOUSING STARTS 2002 t o 2013 4,500 “Hot time for housing in the city – The only 4,000 thing hotter than Winnipeg’s record-break- 3,500 ing spring temperatures is its red-hot resale homes market.” 3,000 2,500 - Winnipeg Free Press, March 23, 2012 2,000 2013 continues to be strong 1,500 • In 2009, new home buyers were cautious due to the reces- 1,000

sion, but in 2010 the number of housing starts rebounded. 500 • In 2012 and 2013 there was a substantial increase in hous- 0 ing starts – a 42% increase over the two-year period. 02 03 04 05 06 07 08 09 10 11 12 13 • Increased demand for multiple-family dwellings was the Multiples 293 785 573 794 1,028 1,423 1,075 517 1,288 1,184 1,806 2,237

driving factor. In fact, the number of multiples built out- Singles 1,117 1,259 1,440 1,400 1,355 1,339 1,405 1,171 1,499 1,605 1,676 1,712

numbered single-family dwellings built during this period. Source: CMHC – Housing Now

Price increase in resale market • Winnipeg has seen a significant increase in housing prices AVERAGE RESALE HOUSE PRICE IN WINNIPEG 2000 t o 2013 over the last decade. $300,000 • Between 2000 and 2013, there was a 200% increase in the

average price of a resale house in Winnipeg. $250,000 • In 2013, the average house price ($268,400) in the resale $268,400 market rose by 5.2%. $200,000 • The Canada Mortgage and Housing Corporation (CMHC) $150,000 is forecasting a 3% increase in house prices in 2014.

Although Winnipeg has experienced significant in- $100,000 creases in the average price of a home, when com- $50,000 pared to other larger cities across Canada, Winnipeg $89,100 continues to be a city with one of the lowest housing $0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 prices in Canada. Source: CMHC, First Quarter 2013 A two-storey home in Vancouver would cost $856,900, or 149% more than the same two-storey home in Winnipeg ($344,600). In Calgary: $453,800, which is 32% more than 2013 AVERAGE RESALE PRICES IN OTHER CITIES in Winnipeg. Standard two-storey house $900,000

$800,000 $700,000 $856,900 $600,000 $500,000

$400,000 $300,000 $453,800 $200,000 $344,600 $100,000

$0 Halifax Regina Ottawa Calgary Victoria Toronto Quebec Hamilton Montreal Winnipeg Edmonton Saskatoon Vancouver

Source: Royal LePage Survey Data, 2013, second quarter

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 13 ECONOMY WINNIPEG’S ANNUAL ECONOMIC GROWTH Real Gross Domestic Product, annual % change “Real GDP in Winnipeg is forecast to rise In constant 2002 dollars 1999 t o 2018 2 per cent this year, up from 1.6 per cent 4.0% in 2013, thanks to stronger growth in

the manufacturing, wholesale and retail 3.0% trade, and public administration sectors.”

- Conference Board of Canada, Metropolitan Outlook, Winter 2014 2.0%

Winnipeg has one of Canada’s most diversified econ- 1.0% omies. Overall, our economic indicators are positive

relative to other parts of Canada. 0 Even though Canada was in a recession in 2009, Winnipeg’s economy was doing relatively well. Winnipeg’s economy saw (1.0%) 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 a 0.5% decline, while the national economy declined by 3.0%. Source: Conference Board of Canada, Metropolitan Outlook Report, February, 2014 From 2011 to 2013, Winnipeg’s economy saw a cautious re- OTHER CITIES’ REAL GDP ANNUAL GROWTH covery, with manufacturing still struggling with a high Cana- 15 – 18 dian dollar and global economic uncertainty. 11 - 13 2014 Forecasted City Average Forecast Annual Average Over the next 5 years: Victoria 0.3% 1.8% 2.3% • Winnipeg’s economy is expected to create 33,000 jobs. Vancouver 2.7% 2.8% 2.8% • Population in the Winnipeg region is forecasted to grow by Edmonton 5.9% 3.4% 3.1% over 40,000 people. Calgary 6.1% 3.7% 3.0% • Following a high level of housing starts in 2013, housing Saskatoon 5.8% 3.2% 2.7% Regina starts are expected to return to 2012 levels in 2014. 5.2% 3.5% 2.5% Winnipeg 1.5% 2.0% 2.4% • GDP growth over the next 4 years (2015 – 2018) is forecast Toronto 2.0% 2.8% 2.6% to average 2.4% per year. Ottawa 0.6% 1.4% 2.2% These are relatively good numbers for Winnipeg. Hamilton 1.1% 2.5% 2.1% Quebec 1.3% 2.0% 1.8% Montreal 1.6% 2.2% 2.1% Halifax 1.4% 2.8% 2.2%

Source: Conference Board of Canada, Metropolitan Outlook Report, February, 2014

ECONOMIC INDICATORS

Forecasted

Winnipeg CMA 2011 2012 2013 2014 2015 2016 2017 2018 Real GDP (2002 $ millions) 32,640 33,150 33,690 34,360 35,280 35,200 37,060 37,740 % change 1.4% 1.6% 1.6% 2.0% 2.7% 2.6% 2.4% 1.8%

CPI % change 2.9% 1.6% 2.4% 2.3% 2.1% 2.1% 2.1% 2.0%

Retail Sales ($ millions) 10,170 10,360 10,600 10,890 11,300 11,780 12,240 12,710 % change 2.4% 1.8% 2.4% 2.6% 3.8% 4.2% 4.0% 3.8% Personal Income per capita $36,080 $37,230 $38,000 $38,940 $40,260 $41,590 $42,920 $44,120 % change 1.6% 3.2% 2.1% 2.5% 3.4% 3.3% 3.2% 3.0% Labour Force 433,600 441,820 445,680 449,760 458,100 464,840 470,440 475,440 % change 0.2% 1.9 % 0.9% 0.9% 1.9% 1.5% 1.2% 1.1% Employment 408,670 417,300 418,920 424,570 433,370 440,630 447,220 452,290 % change 0.1% 2.1% 0.4 % 1.3% 2.1% 1.7% 1.5% 1.1%

Unemployment Rate 5.8% 5.6% 6.0% 5.6% 5.4% 5.2% 4.9% 4.9%

Source: Conference Board of Canada, Metropolitan Outlook Report, February, 2014

14 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Condos on Portage Avenue

“Low interest rates, together with strong population gains in recent years thanks to the Province’s skilled worker nominee program, helped to fuel significant growth in Winnipeg’s housing starts over 2010 to 2012.”

- Conference Board of Canada, Metropolitan Outlook, Spring 2013

VALUE OF BUILDING PERMITS (IN MILLIONS OF DOLLARS)

2013 2012 2011 2010 2009 2008 Residential $ 768 $ 762 $ 623 $ 601 $ 414 $ 511 Non-Residential 1,014 779 536 552 697 542

Total $ 1,782 $ 1,541 $ 1,159 $ 1,153 $ 1,111 $ 1,053

Source: City of Winnipeg Building Permit Survey

In 2013, Winnipeg saw over $1.7 billion in building 2014 City Government Major Capital Investments - six-year plan (in millions) permit values. Sewage Disposal $ 1,100 • Residential permit values were up by 1%; Roads and Bridges $ 618 • The value in non-residential permits was up 30%; Transit System $ 324 • And, overall there was an 18% increase in building Water System $ 172 permit values. Parks, and Community Infrastructure $ 130 The City Government’s Infrastructure Projects over the Public Safety Infrastructure $ 71 next six years total $2.7 billion, of which $379 million Municipal Facilities $ 62 is for 2014. Solid Waste Disposal/Garbage Coll. $ 38 Land Drainage & Flood Control $ 36 These projects, along with other significant major new capital Other $ 137 investments in Winnipeg and the rest of the Province, may $ 2,688 result in additional pressure in service delivery capacity. Labour shortages continue to exist, along with upward pres- Other Major Capital Investments (in millions) sures on construction wages. The result is that base construc- Hydro: Conawapa Generating Station $ 10,200 tion inflation is presently in the 4% range, and there is some Hydro: Keeyask Generating Station $ 6,200 upward risk of this increasing over the next few years. Manitoba Highways (over 5 years) $ 3,700 Cost of Doing Business Rapid Transit / Pembina Underpass $ 600 KPMG’s 2014 Competitive Alternatives examines loca- Seasons of Tuxedo (IKEA) $ 500 tion-sensitive business costs in 89 cities in Canada and the Convention Centre $ 180 United States. Winnipeg has the lowest business costs of cities in western Canada. In fact, Winnipeg has lower business Other projects by category (in millions) costs than all 74 U.S. cities examined. Commercial $ 825 Industrial $ 78 Institutional $ 1,060 Residential $ 788

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 15 The Disraeli cycling and pedestrian bridge

Transit’s new 135,000-square-foot garage Adoptable dog Payton Service Highlights – 2013 Annual Report

INFRASTRUCTURE INVESTMENTS Arden Seven The “Arden Seven” Korean War monument was constructed Bridge Planning and Operations at Jules H. Mager Park in St. Vital. 2013 saw the completion of the Disraeli Bridges Project, including the new cycling and pedestrian bridge across the CUSTOMER SERVICE Red River. 24/7 Facebook and Twitter Engagement The Sturgeon Road twin bridges across Sturgeon Creek were The Public Service collaborated to establish 24/7 coverage of also completed in 2013. the City of Winnipeg Facebook and Twitter pages, to increase Building and Maintaining Roadways after-hours engagement with the public and provide further Included in the 2013 capital program projects of local streets, channels for citizens to access City services and information. regional streets and back lanes was an addition of funding re- 311 Enhancements sulting in the renewal of an additional 13 residential street lo- The 311 mobile app was introduced in August of 2013 and cations. was downloaded approximately 6,500 times on iPhone and The Waverley West Arterial Roads and the Plessis Road Rail Android devices. Underpass Projects continued and design started on the Polo In September, the 311 Contact Centre expanded to include Park Infrastructure Improvement Project. in-person service at City Hall. Customers who find it conve- Transit Garage nient to visit City Hall to do business now have the option In September, Transit took occupancy of its first newly-con- of in-person access to the services and information provided structed garage since 1969. The 135,000-square-foot building by 311 such as reporting a problem, obtaining information, has capacity to store 153 regular, 40-foot buses, and is de- making service requests, paying a water utility bill or buying signed to house and service articulated and electric buses as Transit bus passes. well. The garage was built to fit into the surrounding commu- Business Number Introduced nity and meets LEED silver-level certification for energy effi- In May, Winnipeg became the first municipality in Canada ciency and sustainability. The project was delivered through a to integrate the National Business Number into its customer design build process and was completed under budget. service processes. The National Business Number is a unique, Rapid Transit nine-digit number that identifies a business and is assigned by In September, functional planning work began on Stage 2 of the Canada Revenue Agency. Each business uses the same the Southwest Transitway. Following a 2012 alignment study, nine-digit number in order to establish a common business Transit began a functional design study and a public-private identity across departments and levels of government. partnership business plan, in the interest of beginning con- Animal Services Agency struction in 2016. The completed project will link downtown In 2013, City Council passed the new Responsible Pet Own- with the University of Manitoba and the entire southwest ership By-law. After extensive collaboration with numerous quadrant of the city, with over 13 kilometres of dedicated partners and stakeholders in the community, the by-law is high-speed, bus-only transitway. one of the most comprehensive and progressive animal by- Living Prairie Museum Pergola and Outdoor laws in Canada, addressing not only dog and cat issues, but Education Shelter and Workshop also banning exotic animals in circuses in Winnipeg. A much-needed shade structure was built using reclaimed In 2013, 95% of the dogs that entered Animal Services were materials, many of which came from noted Winnipeg loca- reunited with their owner, adopted out, or sent to a rescue or tions such as the Yellow Brick Warehouse recently demol- animal shelter. In addition, 856 dogs wearing licences were ished on Main Street. It now serves as a meeting place for successfully reunited by 311 without ever having to set foot in members of the community, a picnic area for schools that Animal Services’ facility. take part in programming, and also functions as a demonstra- tion area when hosting workshops.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 17 Over 60 volunteers socialize the Agency’s adoptable dogs, communities with considerable residential and employ- maintain the volunteer-run Petfinder.com, Facebook, and ment densities. Twitter websites, and promote adoption and special events. • The planning process for the Corydon-Osborne area resumed with the selection of a consultant to develop and Water Main Activity Web Page Launched lead a stakeholder engagement process and ultimately A new water main activity web page was launched listing draft a neighbourhood plan for this area. all water mains that are shut off or partially shut off within • The Public Service developed a “Complete Communities the past seven days due to repair work, informing residents Checklist.” This innovative checklist serves as a compre- if there is work going on in their neighbourhood that could hensive tool and approach, that will help foster develop- impact their water service. ment and establish Winnipeg as a unique, sustainable, ur- Garbage and Recycling Collection ban leader. Status Web Page Economic Development Strategy A new web page was launched providing residents with up- Through the efforts of Economic Development Winnipeg, in to-date information on the status of garbage and recycling partnership with the City of Winnipeg, an Economic Devel- collection in their neighbourhood. opment Strategy was completed in 2013. This strategy serves as an important companion document to OurWinnipeg. The PLANNING, ENVIRONMENT AND Economic Development Strategy provides an actionable SUSTAINABILITY blueprint for the advancement of Winnipeg’s economic com- petitiveness and will engage community stakeholders from all OurWinnipeg sectors of the regional economy. In July 2011, City Council approved OurWinnipeg, a development plan which will guide the physical, social, envi- Urban Planning Division Wins Award ronmental and economic development of our city over the In February, the City of Winnipeg received the Manitoba next 25 years. OurWinnipeg was created with the input of Planning Award of Excellence for its Transit-Oriented Devel- more than 40,000 Winnipeggers through the most creative opment (TOD) Handbook. The award was presented at the and collaborative planning process ever undertaken in our Manitoba Planning Conference held in Winnipeg. city – SpeakUpWinnipeg. In July, 2013, the second annual By-Law Amendments OurWinnipeg report to the Community provided an update Zoning by-laws were reviewed to ensure alignment with Our- on OurWinnipeg-related activities connected to key areas of Winnipeg and Complete Communities. As well, in order to the plan over the last 12 months. encourage housing options and support densification in ma- Complete Communities ture and existing communities, the City undertook amend- The Complete Communities Direction Strategy of OurWin- ments to the two by-laws with regard to the Secondary Suite nipeg is a practical and innovative “playbook” to guide land regulations and approval process. A Digital Signs By-law use and development in Winnipeg for the next 25 years. In was approved by City Council in 2013, which provides pol- 2013, significant planning and development activity was un- icy direction regarding the expanding use of digital signs in dertaken for many of the transformative areas identified in our community. Complete Communities (areas of the City that provide the New Facilities and New Uses for Existing Facilities best opportunity for growth and change): • The City closed the sale of the former stadium site for • Two new communities were approved by City Coun- $30.25 million. Redevelopment of the site, within the Polo cil (Precinct T – Castlebury Meadows and Precinct Q Park Regional Mixed Use Centre, is underway. – Ridgewood South). In addition, the planning of six ad- • Bon appétit! Chez Sophie sur le pont opened on the Es- ditional new community precincts continues into 2014. planade Riel bridge in April after the Public Service rec- These areas will accommodate a large share of projected ommended that the Parisian-style bistro be awarded a five- growth and development over the life of OurWinnipeg. year lease agreement for the 4,000-square-foot building. • Area master plans were approved for two major redevel- • In January, the City announced a joint venture partnership opment sites (Palliser and Taylor lands). In addition, plan- for unused St. Boniface industrial lands, expected to gener- ning is ongoing for four of the remaining eight major re- ate more than $34 million in revenue. Terracon Develop- development sites. These underutilized sites will provide ment Ltd. will turn the lands into “Prairie Industrial Park” significant opportunities for the development of complete which will help keep commercial businesses in Winnipeg.

18 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT “Listening Lights” streetscaping renewal project

• In May, the new Sturgeon Heights Community Centre be- yard waste, primarily through the new curbside yard waste came Winnipeg’s first municipal building to be awarded a collection program. LEED Gold designation by the Canada Green Building A new $3 million, nine-hectare composting pad was added in Council. The energy-efficient facility makes extensive use October, to turn all the leaf and yard waste from the curbside of natural light, will use roughly 50% less water than a collection program into thousands of cubic metres of nutri- conventional building and was able to divert 84% of con- ent-rich compost. struction waste from the landfill. In receiving this award, the community centre has exceeded the City of Winnipeg’s New Landfill Gases System Reduces Greenhouse Green Building Policy LEED silver-level certification re- Gas Emissions quirement. A new system to capture and flare landfill gases was fired • The City’s new East Yard complex project was also com- up in 2013, reducing the annual greenhouse gas emissions pleted in 2013. The new facility, located in the Elmwood from the landfill by an amount equivalent to that produced area, combines the operations of several Public Works by about 21,000 cars, at the same time helping to reduce nui- Department divisions and a new Winnipeg Fleet Manage- sance landfill odour. ment Agency facility into one location, in order to provide Water Conservation more efficient, green and cost-effective services. The East Winnipeggers continue to embrace water conservation – Yard complex received LEED gold-level certification. even with almost 200,000 more citizens, residents used less • Following a renovation in 2012, the Sinclair Park Com- water in 2013 than in 1970. munity Centre received LEED silver-level certification in 2013. Listening Lights Streetscaping Renewal Project • Ground was broken at the site of a new 100,000-square- The “Listening Lights” streetscaping renewal project in the foot Seven Oaks Arena in June. Cultural District brings new life and a unique lighting display Waste Diversion to a distinct area. This permanent urban installation was in- spired by the Northern Lights and with a multimedia touch, 2013 was the first full year of the new garbage and recy- these auroras become prismatic, colourfully-lit art pieces rep- cling collection services, and the total waste diversion rate resenting Winnipeg’s cultural district. This installation is part increased by 55%, reinforcing Winnipeggers’ commitment of the city’s plan to encourage people to get out and experi- to the environment. Residents recycled an all-time high of ence their city. 53,657 tonnes of material and composted 23,000 tonnes of

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 19 Salt-Tolerant Boulevard Grass Project WPS members have never been more visible in Winnipeg Testing was conducted on alternative grass species for salt-af- schools through in-school presence and after-school pro- fected boulevard areas. Successful use of these new tech- grams. In 2013, two new School Resource Officers’ positions niques may allow for bare ground areas along boulevards to were introduced as the program was expanded into St. James. be restored to a green grassy state, less affected by salt. In the community, cadets and officers alike continue to cre- Goose Deterrent Turf ate new opportunities to build stronger relationships with With the support of Environment Canada, a test project in- the community. Examples of member-driven community volved the installation of goose deterrent turf grasses along connection programs include the Skates and Badges winter the edges of two retention ponds. The effectiveness of these event and Kickin’ it with Cadets soccer game and community turf grasses will be monitored throughout 2014 and may be barbecue in Central Park. In North Winnipeg, the Annual expanded to additional locations in the future. Spring Feast at the Indian and Metis Friendship Centre continues to grow and is perhaps our longest active communi- SAFETY AND EMERGENCY RESPONSE ty program. Winnipeg Police Board One of our newest initiatives is the WPS’s involvement with the Winnipeg Jets True North Foundation’s Jets Hockey 2013 marked the start of operations of the Winnipeg Police Academy, through which officers and cadets help lead week- Board. As the governing body for the Winnipeg Police Ser- ly hockey camps for grade two and three students from St. vice (WPS), the Board provides civilian governance regarding James-Assiniboine School Division. law enforcement, gives administrative direction to support effective policing in our city, and acts as a liaison between the Addressing Community Concerns Relating to community and the WPS. Prostitution and Exploitation Enhancing Communication with the Community One of the greatest concerns the WPS has heard from the Chief Clunis led a series of 12 community forums, which community is regarding prostitution, and its effect on neigh- were an opportunity for the WPS to share its vision for po- bourhoods, individuals and victims of systematic exploitation. licing our community, but more importantly, for citizens to In response, the WPS combined the Vice and Missing Per- bring forward their expectations and the issues they want- sons Units under one umbrella, now known as the Count- ed addressed. er Exploitation Unit to gain momentum in addressing this community need. While traditional face-to-face community connections will always be a cornerstone of policing in Winnipeg, the WPS also The Unit is responsible for investigating human trafficking, embraced social media as a means of connecting and better underage prostitution, and those who exploit vulnerable per- serving the community. sons involved in the sex trade.

On October 29, striving to improve communications and In order to improve safety for people working in the sex transparency with the community, the WPS launched an of- trade, the Counter Exploitation Unit has partnered with a ficial Twitter account, @wpgpolice, to provide timely news number of government and non-government agencies that and information directly to the public. The account attracted are involved in assisting sex trade workers in exiting the trade. more than 7,000 followers in its first four months of operation. Members of the Counter Exploitation Unit are sensitive to the unique circumstances faced by many of the people being The WPS has also made a more concerted effort to share sexually exploited in our community. information through its YouTube channel. During 2013, the number of subscribers to the channel more than doubled and Combatting Organized Crime the amount of content available has grown exponentially. The WPS is committed to curbing organized crime. In Febru- ary, under Project Recall, members of the Street Crime Unit Investing in our Youth began a large operation focusing on the illegal drug activities Recognizing the importance of supporting our youth, mem- of a local street gang. The effort resulted in nine of the ten bers of the WPS have made a concerted effort both on and off primary gang members being arrested, as well as the seizure duty to provide leadership for Winnipeg’s young people and of two shotguns and approximately 80 rounds of ammunition. to create positive opportunities for them in the community.

20 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 21 Skates and Badges winter event Investing in Our Infrastructure Eight New Pumper Trucks The WPS is making positive strides in moving toward the City In July and August, the WFPS received eight new pumper Council-approved Four District Model – increasing efficien- trucks from Fort Garry Industries through a project complet- cies and creating a more collaborative working environment. ed on time and within budget. Officers began operations in the new West District Police Rehab Unit Station, located at 2321 Grant Avenue, in December. The A WFPS rehab unit has been placed in service at Station 7, 33,000-square-foot station allowed for the consolidation of located at 10 Allen Blye Drive. Historically, WFPS crews did resources in order to maximize our efforts within the various not have the ability to rest and rehabilitate at the scene of communities and better serve our citizens. protracted incidents. The new rehab unit will provide shel- And, on June 21, the WPS officially opened the doors to ter and medical assessment of crews suffering the effects of the new K-9 facility which houses the Unit’s 26 canines and sustained physical or mental exertion during emergency op- breeding program. This 4,500-square-foot state-of-the-art fa- erations, to ensure their safety and well-being. The unit will cility is adjacent to the East District Police Station and has 11 respond to all protracted major incidents including fires, haz- air-conditioned indoor kennels and attached dog runs. The ardous materials events, and mass casualty medical incidents, building features a large community classroom and common for example. area for public demonstrations and office space. New Baby Pod In addition, the new facility also features a kennel and indoor The WFPS has introduced a field transport device to ensure puppy run as part of the Winnipeg Police Service’s nationally safe and warm transport of infants born in the pre-hospital recognized in-house breeding program, which has supplied environment. The device allows for monitoring and treatment pups to other law enforcement agencies both in Canada and of the newborn in a warm and secure environment. This also the United States, as well as the Military and Natural Re- enables the mother to be transported with her newborn child sources Department. in the same ambulance, safely and securely. Emergency Paramedics in the Community (EPIC) Power Lift Stretchers The EPIC program, a partnership of the Winnipeg Fire WFPS members, in the provision of emergency medical re- Paramedic Service (WFPS), WRHA, Manitoba Health, and sponse, have experienced significant muscle strains and low- social and community organizations, focuses on improving er-back injuries due to the continual lifting of patients. In or- the level of health care within the community. A paramed- der to reduce work-related injuries, the WFPS has invested ic visits a residence to assess the patient’s medical condition in the health and well-being of personnel and patient safety, and refer the patient to appropriate community resources for by implementing a power lift stretcher system. These stretch- follow up, further assessment, and to develop a process to ers, partially funded by Manitoba Health, utilize a motorized help support the patient, reducing emergency transport and lift mechanism for raising and lowering stretchers with pa- health-care costs. tients onboard, to reduce potential injuries to paramedics Fire Paramedic Service Station 11 and patients. The Fire Paramedic Service Station 11 Project was complet- Incident Management Simulator ed in 2013. The new station houses 68 members and five The WFPS is using new technology to train its members pieces of apparatus including one paramedic unit, one medi- in incident management techniques. One of the new tools, cal supervisor unit, one ladder truck, one pumper truck, and called Flame-Sim, allows the WFPS to train all personnel us- one rescue unit. ing real-time and realistic scenarios. Studies show that these Emergency Vehicle Traffic Signal types of scenarios provide for increased effectiveness, improved decision-making and increased safety for responders An emergency vehicle traffic signal was installed on Portage and citizens. Avenue at Fire Paramedic Station 11. This is the first of its kind in Winnipeg and will help the WFPS expedite respond- ing from this location.

22 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT PARTNERSHIPS, PROGRAMS Since 2009, almost 900 Aboriginal youth have graduated from OAN community partner employment programs. Of these, AND INITIATIVES 58% have entered the labour market and one-third have un- Neighbourhoods of Winnipeg (NOW) dertaken an educational program. In May, the Mayor officially launched the City’s NOW (Neigh- Aboriginal Primary Care Paramedic Program bourhoods of Winnipeg) website, that provides wide-rang- The Aboriginal Primary Care Paramedic (PCP) program is ing information about Winnipeg’s 236 neighbourhoods and a joint venture between the WFPS and OAN, along with provides a single point of access for information such as the community partners the Assembly of Manitoba Chiefs, Man- location of schools and libraries, census and demographic in- itoba Metis Federation, the Centre for Aboriginal Human formation, historical data and mapping information. Resource Development Inc. and First Peoples Development Included in the NOW portal is a feature developed in part- Inc. The program, conducted at the WFPS Training Acade- nership with Economic Development Winnipeg Inc. and my, will graduate 16 PCPs at the end of June 2014. WinnipegREALTORS®, which provides key information to Electrician Apprenticeship those locating a business in Winnipeg or existing businesses looking to expand or relocate within the city. This project provided an opportunity for one Aboriginal youth to obtain direct work experience with the Water and Basement Flood Protection Subsidy Program Waste Department and pursue continuing education to at- In 2013, 568 property owners improved their basement flood tain formal qualifications in the electrical trade over a two- protection by taking advantage of the provincial-civic Base- year period. ment Flood Protection Subsidy Program to install an in-line LiveSAFE backwater valve and/or sump pit drainage system. LiveSAFE is the City’s collaborative, community-based crime Automatic Fare Collection System prevention strategy that seeks to address the root causes of Transit upgraded its entire bus fleet with electronic farebox- crime in Winnipeg. With funding support from the Province es in May to improve the efficiency of revenue management of Manitoba, the City of Winnipeg enhanced the follow- and security of fare collection; over $75 million in transit fare ing initiatives: revenue was collected in 2013. When fully implemented, the electronic fare collection system will provide Winnipeg Sports in Inner City Neighbourhoods (SPIN) residents with an industry-leading purchasing and payment • 1,055 inner-city Winnipeg children participated in the pro- system for Transit fare products. gram for free at 25 sites in 2013. • SPIN provides inner city children aged 6-14 with free ac- Aboriginal Relations Division cess to sports opportunities (flag football, soccer, basket- To enhance our relationship with and provision of opportuni- ball, volleyball, ball hockey, water polo and diving) offering ties for Winnipeg’s Aboriginal population, particularly young them a fun way to learn basic skill development, sports- people, the City created the Aboriginal Relations Division of manship, teamwork, leadership, and fair play in a friendly, Corporate Support Services in 2013. The Division is mandat- supportive environment. ed to provide leadership and experience from an Aboriginal perspective on programs, services, and initiatives that support Youth Mentorship Program and address the needs of Winnipeg’s Aboriginal community, • 3,680 volunteer program hours were completed by youth now and into the future. from St. John’s, Children of the Earth, R.B. Russell and Daniel McIntyre schools. Aboriginal Youth Strategy • Youth are mentored by University of Manitoba students in Oshki Annishinabe Nigaaniwak (OAN), the City of Winni- Recreation Studies and Kinesiology to learn how to plan peg’s Aboriginal Youth Strategy, supports young urban Ab- and deliver an after-school drop-in program for early-year originals in seeking and achieving educational and profes- students in an inner-city school or recreation centre. sional development and employment opportunities, both • Twenty-four mentored students now work for the City of within the City system and in the wider community. In 2013, Winnipeg or other community employers. over 400 Aboriginal youth engaged in OAN projects, including six interns, 28 award and scholarship recipients and 24 attendees of career weeks.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 23 Art City WHALE Parade The “Funnelator”

LiveSAFE in Winnipeg Programming • This year, the City provided free recreational opportunities • 6,508 program hours of programming were provided at var- to 44 families. These opportunities included 152 facility ious recreation centres including Turtle Island Recreation passes and access to 43 recreation programs. Centre, Mayfair Recreation Centre, Broadway Neighbour- Accessible Pedestrian Signals hood Centre, Norquay Community Centre, Ralph Brown The City has installed accessible pedestrian signals (APS) Community Centre and Pritchard Park. at over 300 signalized intersections in Winnipeg. This is the • 20,260 children and youth visits were recorded and 30 rec- largest deployment of APS in Canada. The City plans to reation leaders from the inner city were hired to deliver equip every signalized intersection with APS as part of its the programs. commitment to accessibility and universal design. Community Art Program Cuddles 4 Kids • 6,497 inner-city children and youth participated in 560 In November 2013, 10-year-old Madison Vanderhooft and creative workshops in this free partnership (Art City and her mom, Alex, approached the Winnipeg Fire Paramedic Graffiti Art) program offered at the Immigrant and Refu- Service to help them bring “cuddles” (stuffed animals) to gee Community Organization of Manitoba, Magnus Elia- children who are being transported by ambulance or witness- son Recreation Centre, Daniel McIntyre/St. Matthews ing a loved one as they are taken to hospital. Madison and her Community Association, West Central Women’s Resource cousin Cameron Houle collected over 150 stuffed animals Centre, Rossbrook House, Turtle Island Neighbourhood that they had dry cleaned and donated to the WFPS. Mad- Centre, Norquay Community Centre, Ralph Brown Com- ison is going to continue doing “teddy bear drives” through munity Centre, North Centennial Recreation and Leisure a new school-based initiative called “Cuddles 4 Kids” so that Centre and Pritchard Park. ambulances and fire trucks will always be ready to help com- • Twenty-four recreation leaders were hired from the com- fort a child in crisis. munity to deliver the program. SHED Turnabout Program In 2013, the City worked collaboratively with CentreVenture • This program is provided by the Province of Manitoba in and the Province of Manitoba to implement Phase 1 of the partnership with police agencies. Sports, Hospitality and Entertainment District’s (SHED’s) • It offers a direct support and referral service to children Master Plan. In keeping with SHED’s mandate, Phase 1 un- under 12 years who have been in conflict with the law or dertook completion of enhancements in the Graham Avenue are at risk. Corridor, including the installation of an electronic funnel • Turnabout’s goals are to prevent a child from having fur- shaped interactive light feature–aptly named a “Funnelator.” ther contact with police, to ensure early identification of serious and persistent behaviour problems and to reduce RBC Convention Centre Expansion the number of children under 12 coming into contact with Work on the $180+ million expansion of Winnipeg’s RBC the law. Convention Centre progressed well in 2013. In June 2012, the City of Winnipeg announced that it would, in partnership with the Province of Manitoba and the Government of Can-

24 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Autumn leaves in the West Alexander neighbourhood ada, provide funding for a major expansion and renovation of ments to the DED program included: a private elm inventory the Convention Centre in Winnipeg. With the expansion, the that identified over 118,000 elm trees on private properties Convention Centre will double in size, making Winnipeg’s in the north section of the city, treatment of all elm trees in RBC Convention Centre the fourth-largest publicly-owned most of the north section of the city, a rapid removal program convention centre in Canada. to remove diseased elm trees by the end of summer to further reduce the spread of DED, and additional tree planting to Investors Group Field Traffic Management Plan replace trees lost to DED on public property. The remaining City departments and agencies collaborated with the Win- private elm inventory will be completed in 2014. nipeg Football Club and University of Manitoba, along with community stakeholders, to implement and evaluate a traffic Fraud and Waste Hotline management plan for Investors Group Field. The plan helps The Audit Department expanded the Fraud and Waste Ho- facilitate the movement of over 30,000 people through the tline to include accessibility to citizens, in July. The Fraud use of temporary traffic control, public transportation, park- and Waste Hotline is a confidential and anonymous service ing management, traffic signal timing changes, volunteers that allows citizens and staff to report complaints 24 hours a and public communication. day, 7 days a week. Previously, the hotline was only accessible to City staff. Building Permits Strategy 2013 saw continued implementation of the City’s 2012 com- Community By-law Enforcement Services prehensive Building Permits Strategy and Action Plan, with Under City Council-approved policies including OurWin- a focus on: nipeg, LiveSAFE, and various Property Standard by-laws, the Public Service is working together with core area com- • Establishing and communicating target times for review of munity resident associations in order to improve neighbour- commercial permit applications (by category): hood liveability. • Regularly reporting on service performance to provide enhanced predictability for industry, and • As at December 31, 2013, the number of vacant buildings • The provision of innovative alternatives for expedited had decreased 32% from 577 (2010) to 390. permit application services (Optional Professional Cer- • In 2012 and 2013, 367 ‘new’ vacant buildings were added tificate Program). to the list while 408 were removed. • Significant improvement in customer satisfaction regard- • Of the 390 vacant buildings as at December 31, 2013, 150 ing permits and inspections. were conventionally secured and in full compliance with the by-law. Urban Forest Protection Strategy • In 2013, five proactive yard-to-yard and, more recently, The Urban Forestry Branch implemented key components of building-to-building property standard inspection sweeps the comprehensive strategy to enhance the protection of our were conducted by community by-law enforcement offi- urban forest from Dutch elm disease (DED) with $1.9 million cers in some of Winnipeg’s most vulnerable areas. of additional funds approved by City Council. The enhance-

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 25 RECREATION AND LEISURE Library Renovations In early January 2013, the St. Boniface Branch reopened Playgrounds following a major renovation as a result of a Government of Twenty-five community playgrounds were renewed with new Canada grant. Counters and carpeting were replaced, and equipment and landscaping in 2013. washrooms were made accessible.

Arena Expansions Also in 2013, the St. James Library underwent renovations In February, City Council approved the City of Winnipeg on the second floor of the library. Collections previously inac- entering into a tripartite funding partnership with two local cessible to the public are now hosted in an expanded public community centres and the Province, which will see the Gar- space on the second floor. A new reading lounge has been den City Community Centre expand to include a multi-pad opened up and new carpeting has been added to the space. (twin) arena and multi-use facility, as well as the Transcona East End Community Centre expansion, which will result in Free WiFi at all Branches a triplex arena facility. Free WiFi is now available at all library branches thanks to Shaw and MTS. Community Centre Renovation Fund The program, approved by City Council on February 22, Past Forward 2012, provides up to $965,000 in annual funding for commu- In February, Winnipeg Public Library launched Past For- nity centres to access in support of repairs, upgrades, retro- ward, a digital website to showcase historical photographs, fits, safety improvements and renovation projects. Applicants images and postcards of rare and vintage Winnipeg imag- are eligible for 100% support of project costs to a maximum es. Since its launch the site has received over 835,000 views. of $50,000 per project per calendar year. Aboriginal Programming Area Twenty-three Community centres were approved for grants On May 15, the Millennium Library hosted the launch of in 2013. a new Aboriginal Programming area. The renovation of the Aquatic Services second floor was made possible, in part, by a bequest from the estate of Mr. John Grant McDonald, a long-time library Three new neighbourhood spray pads were opened in June at: user. One of the highlights of this project is a beautiful new • St. James Assiniboia Centennial Pool, space designed specifically for the adult Aboriginal Resources • Westdale Outdoor Pool, and Area. Created with the input of Anishinaabe interior designer • Transcona Centennial Pool. Destiny Seymour, and using imagery and materials of signif- In 2013, the Aquatic Services Division offered 8,054 swim icance to a number of indigenous cultures, this light-filled classes to 34,595 registered patrons. Attendance at Friday and space welcomes people of all backgrounds who are interested Saturday evening youth free swims at City pools was 25,780. in learning more about First Nations, Metis and Inuit topics. The space was also designed with flexible furniture arrange- Library Services ments for programming. New Charleswood Library Homework Club In December 2013, City Council approved a contract for a At the Millennium Library, in partnership with Frontier Col- new Charleswood Library, to be leased in a mall near the cur- lege, 230 children participated in a homework club that pairs rent library. The new 14,000-square-foot facility will be three children’s educational needs with appropriate tutors. times the size of the current facility, fully accessible, and will have a new multipurpose program room and increased 50-Year Celebration parking. It is anticipated that the new library will open late In June of 2013, the St. Vital Library celebrated its 50th year in 2014. of operation with a special celebration.

26 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT St. Boniface Cathedral-Basilica Report from the Chief Financial Officer FINANCIAL STATEMENT DISCUSSION AND ANALYSIS

I am pleased to present the following Financial Statement Discussion and Analysis, prepared by management. The following discussion and analysis of the financial performance of The City of Winnipeg (the “City”) should be read in conjunction with the audited consolidated financial statements (the “Statements”) and their accompanying notes and schedules. The Statements, as well as the accompanying materials, are prepared in accordance with Canadian generally accepted accounting principles for governments established by the Public Sector Accounting Board (“PSAB”) of the Canadian Institute of Chartered Accountants.

FINANCIAL REPORTING MODEL The objective of financial statements is to describe to the user the organization’s financial position, the results of its operations and how the economic resources for its various activities have been derived and consumed. The Statements provide information about the economic resources, obligations and accumulated surplus of the City. While similar to financial statements of private sector organizations, government financial statements are different, accounting for the unique aspects of their operations.

Consolidated Statement of Financial Position Provides information to describe a government’s financial position in terms of its assets and liabilities as at the end of the reporting period. Reporting net financial position and accumulated surplus are important indicators to determine the government’s financial well-being.

Consolidated Statement of Provides accountability information for a government’s current period oper- Operations and Accumulated Surplus ations and the related achievement of objectives for the reporting period. It also describes the change in accumulated surplus.

Consolidated Statement of Cash Flows Provides information about the impact of a government’s activities on its cash resources in the current period.

Consolidated Statement of Provides accountability information regarding the extent to which expendi- Change in Net Financial Liabilities tures made in the period are met by the revenues recognized in the current period.

FUNDS, ENTITIES, AND INVESTMENT IN GOVERNMENT BUSINESSES As noted above, the Statements are consolidated, meaning they reflect all resources and operations under the control of the City. They include departments of the City, special operating agencies, utilities, and entities that are controlled by the City, as well as the City’s investment in government businesses. The following is a brief description of the major funds, entities and investments included in the Statements.

Funds A fund is a grouping of accounts used to report on resources that have been segregated for specific activities or objectives. The City, like other local governments, establishes these funds to achieve and demonstrate compliance with financial requirements.

The General Revenue Fund reports on tax-supported operations, which include services provided by the City to citizens such as police, fire, ambulance, library and street maintenance. The General Capital Fund was created to account for tax-supported capital projects. The tax-supported capital program is made up of, but is not limited to, reporting on the acquisition and/ or construction of streets, bridges, parks and recreation facilities. The utility operations are comprised of the Transit System, Waterworks System, Sewage Disposal System and Solid Waste Disposal Funds, each accounting for its own operations and capital program.

28 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT There are four Special Operating Agency (“SOA”) Funds included within the City’s organization. Animal Services (established in 2000), Winnipeg Golf Services (2002), Fleet Management (2003) and Winnipeg Parking Authority (2005) deliver services as special units of the City.

The SOAs have been given the authority to provide direct public services, internal services, or regulatory and enforcement programs. SOA status is granted when it is in the City’s interest that the services remain within the government but require greater flexibility to operate in a more business-like manner. Each SOA is governed by its own operating charter and prepares an annual business plan for adoption by City Council.

City Council has approved the establishment of Reserve Funds, which can be categorized into three types. Capital Reserves finance current and anticipated future capital projects, thereby reducing or eliminating the need to issue debt. Special Purpose Reserves provide designated revenue to fund the Reserves’ authorized costs. The Financial Stabilization Reserve assists in the funding of major unexpected expenses, or revenue deficits reported in the General Revenue Fund.

Entities and Investment in Government Businesses The civic corporations included in the Statements are the Assiniboine Park Conservancy Inc., Winnipeg Public Library Board, The Convention Centre Corporation, Economic Development Winnipeg Inc., Winnipeg Enterprises Corporation, Winnipeg Arts Council Inc., and CentreVenture Development Corporation. These corporations are involved in various activities including economic development, recreation, tourism, entertainment and conventions. The North Portage Development Corporation, Winnipeg Housing Rehabilitation Corporation and River Park South Developments Inc. are included in the Statements as investment in government businesses.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION Financial statements should present information to describe the government’s financial position at the end of the accounting period. Such information is useful in evaluating the government’s ability to finance its activities and to meet its liabilities and contractual obligations, as well as the government’s ability to provide future services. To this end, governments need to under- stand the total economic resources they have on hand to deliver services. These resources can be financial (e.g., cash, accounts receivable) and non-financial (e.g., tangible capital assets). At the same time, in respect of services delivered, governments will have liabilities to be settled in the future, that will consume the financial resources. This is a measure of the government’s net financial asset/liability position. This measure must be considered in tandem with accumulated surplus to determine the government’s ability to deliver services in the future. A significant portion of accumulated surplus includes the investment made in tangible capital assets which, for governments, represent service delivery capacity.

As at December 31, 2013, the City of Winnipeg reports:

(in thousands of dollars) 2013 2012 Variance Cash and cash equivalents $ 329,661 $ 392,041 $ (62,380) Other financial assets 617,919 557,538 60,381 Financial assets 947,580 949,579 (1,999) Liabilities 1,358,643 1,275,184 (83,459) Net financial position (411,063) (325,605) (85,458) Non-financial assets 5,558,726 5,238,113 320,613

Accumulated surplus $ 5,147,663 $ 4,912,508 $ 235,155

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 29 The following elaborates on four key indicators in the Consolidated Statement of Financial Position–cash resources, net financial position, non-financial assets and accumulated surplus: Cash Resources The cash resources of the City are its cash and cash equivalents. It includes cash on hand and demand deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investing or other purposes. During 2013, the City’s cash decreased by $62.4 million. This decrease resulted primarily from cash invested in tangible capital assets exceeding cash generated through operating and financing activities.

Net Financial Position NET FINANCIAL POSITION Net financial position is the difference between finan- 100 cial assets and liabilities, which provides an indication of the affordability of additional spending. As at December 0 31, 2013, the City was in a net financial liability position

of $411.1 million (2012–$325.6 million). The change in (100) net financial position during the year resulted primarily from increased accounts payable balances related to the (200) construction of tangible capital assets. Millions($) (300) Non-Financial Assets Non-financial assets of the City are assets that, by na- (400) ture, are normally for use in service provision and include purchased, constructed, contributed, developed (500) 2009 2010 2011 2012 2013 or leased tangible capital assets, inventories of supplies, and prepaid expenses. Tangible capital assets are the most significant component of non-financial assets. TANGIBLE CAPITAL ASSETS (NET BOOK VALUE)

As indicated in the accompanying chart, the City con- 6,000,000 tinues to invest in its infrastructure. The acquisition of tangible capital assets is the result of a capital budget 5,000,000 plan. The challenge in creating a capital budget is bal- 4,000,000 ancing infrastructure needs and protecting the environment while ensuring fiscal responsibility. On January 29, 3,000,000 2013, City Council adopted the 2013 annual capital bud-

get and the 2014 to 2018 five-year forecast. The six-year In Thousands($) 2,000,000 plan authorizes $2.5 billion in City capital projects, with $374.7 million earmarked in 2013. Some of the projects 1,000,000 included in the 2013 capital budget are: street projects 0 of $109.1 million, including $30 million for Polo Park 2009 2010 2011 2012 2013

Area Infrastructure Improvements and $7.4 million for n Assets Under Construction n Vehicles, Computers & Other Molson Street twinning; $5 million for the East Elm- n Underground & Other Networks n Buildings wood Community Centre; and $7.2 million for commu- n Roads, Bridges & Other Structures n Land n Plants & Facilities nity resource recovery facilities.

Also included in the capital investment plan over the six-year period is anticipated funding of $242.7 million under the Federal Gas Tax Agreement, $316.9 million of anticipated provincial funding, $458.9 million of cash funding and $744.7 million of debt financing.

During 2013, the City acquired $543.9 million of tangible capital assets (2012–$654.0 million) including contributed roads and underground networks totaling $91.9 million (2012–$72.2 million). These were capitalized at their fair value at the time of receipt. As well, of the assets acquired, $479.9 million was for tax-supported projects (73%). Spending on tax-supported projects was primarily on roads and bridges, a priority of City Council.

30 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Accumulated Surplus Another important financial indicator on the Consolidated Statement of Financial Position is the accumulated surplus position. The accumulated surplus represents the net assets of the City, and the yearly change in the accumulated surplus is equal to the annual excess of revenues over expenses for the year (results of operations or annual surplus).

Accumulated surplus is comprised of all the accumulated ACCUMULATED SURPLUS surpluses and deficits of the funds, reserves and controlled 6 entities that are included in the Statements, along with the City’s unfunded liabilities such as vacation, retirement al- 5 lowance, compensated absences and legal liabilities. Accu- mulated surplus primarily consists of the City’s investment 4 in tangible capital assets (2013–90%; 2012–90%). The in- 3 vestment in tangible capital assets represents the unamortized cost of the tangible capital asset which will be reported In Billions($) 2 as an expense in future accounting periods, except for land.

Land is non-depreciable property due to its infinite life. In- 1 vestment in tangible capital assets is not readily accessible for use in funding ongoing operations. 0 2009 2010 2011 2012 2013 The City’s accumulated surplus, through its investment in tangible capital assets, has grown over the period, indicating n Other surpluses n Reserves n Invested in tangible capital assets a strong foundation upon which services will continue to be delivered in the future.

CONSOLIDATED STATEMENT OF OPERATIONS Financial statements should show how and where the government realizes its revenues. They provide information that is useful in gaining an understanding of a government’s revenue sources and their relative contribution. They also report the nature and purpose of a government’s expenses in the period, demonstrating the allocation and consumption of resources.

REVENUE EXPENSES 1,800 1,500

1,200 1,350

900 900 600 In Millions($) In Millions($)

450 300

0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

n Investment and other n Sales of services and fees n Other n Public works n Contributed capital assets n Taxation n Finance and administration n Utility operations n Government transfers n Property and development n Protection and community services

Beyond government transfers, the City has a good balance of revenue sources, with the majority regularly coming from taxation, sales of services and regulatory fees. PSAB has introduced indicators of financial condition to assist users of government financial statements to assess financial condition. Indicators of vulnerability measure a government’s risk of over-dependency on sources of funding outside its control or influence or exposure to risks that could impair its ability to meet financial and service commitments. Over the five-year period presented, government transfers as a percentage of total revenue has been stable, ranging from 18 to 20%.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 31 Once completed in 2016, the RBC Convention Centre will double in size and be the fourth largest publicly owned convention centre in Canada. The City is contributing $51 million and guaranteeing a loan for $33 million for the project.

As the accompanying Expenses table indicates, the City’s protection and community services and public works expenses have increased over the five-year period presented, indicating City Council’s priorities for public safety and roads.

CONSOLIDATED STATEMENT CASH FLOWS OF CASH FLOWS 800 600 A government finances its activities and meets its obligations by generating revenues, through external borrowing and uti- 400 lizing existing cash resources. Cash resources are generated 200 and consumed through operating, capital, financing and investing activities. 0

In Millions($) (200) Capital investments have been more significant over the past three years, financed largely through operations, which (400)

includes capital-related government transfers, and a re- (600) sponsible amount of debt. With the Disraeli Bridges design, (800) build, finance and maintain project commissioned in 2012, 2009 2010 2011 2012 2013 higher tangible capital asset acquisitions and related debt, which includes the service concession arrangement, are not- n Investing n Financing n Capital n Operating Year end balance ed in the chart to the right.

CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL LIABILITIES As indicated earlier, net financial liabilities is an important measure for governments. Representing the difference between the government’s liabilities and its financial assets readily available to satisfy those liabilities, this statement explains why this change differs from the annual surplus produced by the government.

As previously discussed, the City has been making higher in- CHANGE IN NET FINANCIAL LIABILITIES vestments in its infrastructure over the past three years, as is 600 evident from the accompanying chart. With the investments being made exceeding financial assets generated through 400 operations, the City has partially financed this difference 200 through the assumption of more debt. 0 Even though the City has assumed more debt in recent years, it has done so responsibly. This statement is reflected (200) In Millions($) in the results of its credit rating review. Late in 2013, Stan- (400) dard & Poor’s (“S&P”) affirmed the City’s AA credit rating. The rationale for the rating was: “strong economic funda- (600) mentals, very positive liquidity position, and average but (800) rising debt burden”. However, S&P noted these strengths 2009 2010 2011 2012 2013 are offset somewhat by limited budgetary flexibility, which negatively affects budgetary performance, particularly af- n Tangible capital asset expenditures n Annual surplus n Contributed tangible capital assets Year end balance ter-capital balances. Moody’s Investors Service announced n Tangible capital asset amortization in February 2014, it would also be maintaining the City’s credit rating at Aa1.

These debt ratings contribute to the City’s ability to access capital markets and to obtain competitive and comparable borrowing terms.

32 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Standard & Poor’s report notes the positive impact on the City’s sound financial management practices. Moody’s noted effective budget techniques leads to solid fiscal performance and improvement in financial position.

Another indicator of financial condition introduced by PSAB measures flexibility. Flexibility is the degree to which the City can issue more debt or increase taxes to meet its existing financial and service commitments. Even with the assumption of more debt, the City’s public debt charges (interest expense)-to-revenues has remained constant over the past several years at a level between 0.03 to 0.04. This indicates the City has sufficient sources of revenue to meet its financial and service commitments. It also demonstrates the low interest rates on debt, reflecting the current market but also the City’s strong credit rating.

ANALYSIS OF STATEMENTS The following analysis provides enhanced detail on the Statements. Accounts Receivable The largest component of accounts receivable is trade accounts and other receivables at 57% (2012–53%). Approximately 36% of trade accounts and other receivables results from services rendered in the Waterworks System and Sewage Disposal System. Management has determined credit risk to be low on the outstanding receivables in these two Funds and has provided an allowance for doubtful accounts of $400 thousand (2012–$401 thousand).

As at December 31, 2013, property, payments-in-lieu and business tax receivables, net of the estimated allowance for uncol- lectible amounts, represented 18% (2012–17%) of total receivables. Taxation revenue is 38% (2012–39%) of total consolidated revenues.

TAXES RECEIVABLE

As at December 31 (in thousands of dollars) 2013 2012 2011 2010 2009 Taxes receivable $ 49,592 $ 37,960 $ 34,747 $ 34,387 $ 30,036 Allowance for tax arrears (3,694) (3,351) (2,629) (3,080) (3,784)

$ 45,898 $ 34,609 $ 32,118 $ 31,307 $ 26,252

Investments

INVESTMENTS

As at December 31 (in thousands of dollars) 2013 2012 Marketable securities Provincial $ 5,750 $ 6,713 Municipal 68,482 75,726 74,232 82,439 Manitoba Hydro long-term receivable 220,238 220,238 Other 12,346 1,172 $ 306,816 $ 303,849

Market value of marketable securities $ 73,892 $ 86,221

During 2002, Manitoba Hydro acquired Winnipeg Hydro from the City. The resulting long-term receivable from the sale included annual payments commencing in 2002, which declined gradually to $16 million annually thereafter in perpetuity starting in 2011. The accounting value of the investment is based on the discounted sum of future cash flows that have been guaranteed by the Province. The long-term receivable has been fixed at the December 31, 2010 value, which coincides with the payments remaining at $16 million in perpetuity.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 33 Marketable securities are generally long-term in nature. These securities are being held to finance future anticipated costs such as perpetual maintenance at the three cemeteries maintained by the City. City Council has approved an Investment Policy to provide the Public Service with a framework for managing its investment program. The Investment Policy provides guidance and parameters for developing a portfolio strategy; a performance measurement section, including benchmarks and objectives; an enhanced reporting framework; and additional categories of investments that can be made. Safety of principal remains the overriding consideration for investment decisions. Consideration is also given to risk/return, liquidity and the duration and convexity of the portfolio. Debt

DEBT

As at December 31 (in thousands of dollars) 2013 2012 Sinking fund debentures $ 658,000 $ 688,000 Equity in sinking funds (195,237) (264,037) 462,763 423,963 Serial and installment debt 34,621 56,884 Bank, Province of Manitoba and other loans 109,263 116,427 Capital lease obligations 26,056 26,592 Service concession arrangement obligations 157,344 158,759 790,047 782,625 Unamortized premium on debt 10,349 10,536

$ 800,396 $ 793,161

The City of Winnipeg has several types of debt obligations. The largest component of debt is sinking fund debentures. Under The City of Winnipeg Charter, the City is required to make annual payments towards the retirement of sinking fund debt for which the City maintains two sinking funds. One of the sinking funds is managed by The Sinking Fund Trustees of the City of Winnipeg. The second fund was created as a result of revisions to The City of Winnipeg Charter and is managed by the City for sinking fund arrangements after December 31, 2002. The City pays interest on the principal to the investors and contributes a set percentage of the principal into the sinking funds. The sinking fund contribution percentage is set at the time of debt issu- ance and is estimated to be sufficient to retire the debentures as they mature.

These annual sinking fund payments are invested primar- NET SINKING FUND DEBENTURES, ily in government and government-guaranteed bonds and SERIAL AND INSTALLMENT DEBT debentures. By investing in bonds and debentures of invest- 600 ees that are considered to be high quality, the City reduces its credit risk. Credit risk arises from the potential for an investee to fail or to default on its contractual obligations. However, The Sinking Fund Trustees of the City of Winni- 400 peg is projecting a sinking fund deficiency of $17 million for the November 2017 debt retirement (series VU,) due to the

low interest rate environment which has persisted since the In Millions($) 200 global economic crisis of 2008. This November 2017 maturity is the last issue that will be retired based on the securities actively managed by the Trustees. 0 The Sinking Fund Trustees of the City of Winnipeg also 2009 2010 2011 2012 2013 manage debt related to Winnipeg Hydro. Manitoba Hydro n Transit System n Waterworks System purchased Winnipeg Hydro in September 2002 and as part n Sewage Disposal System n General Capital Fund of the sales agreement, this sinking fund is required to hold Manitoba Hydro Electric Board bonds issued by Manitoba

34 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Hydro. These bonds were issued for the purpose of enabling the City to repay and defease the Winnipeg Hydro debt, having identical terms and conditions as to par value, interest and date of maturity as the debt. The bonds are guaranteed by the Prov- ince of Manitoba.

During 2013, the City issued a sinking fund debenture for $60 million. The debenture carries a 4.4% interest rate and will mature on November 15, 2051.

The City has also incurred serial and installment debt having varying maturities up to 2019, and carrying a weighted average interest rate of 4.5% (2012–4.7%). Annual interest and principal payments are made on the debt to the investors. In addition, the City has guaranteed the payment of principal and interest on capital loans totaling $7.4 million (2012–$6.6 million) for several third parties. The City does not anticipate incurring future payments relating to these guarantees.

Liquidity is an important measure of an organization’s ability to readily service its debt obligations. This is measured by a debt service coverage ratio, comparing free cash and liquid assets to annual debt servicing (principal and interest). The following table presents the last five years:

2013 2012 2011 2010 2009 Free Cash and Liquid Assets/ 427.4% 528.9% 646.6% 577.2% 621.6% Debt Service

The past two years have seen this ratio reduce somewhat, resulting from the City’s higher investment made in tangible capital assets. In its recent credit rating report, Standard and Poor’s commented that the City maintains very positive liquidity that even under their conservative base-case scenario, will remain strong. Reserves Reserve balances have decreased overall by $7.4 million (2012–$10.5 million increase) from the prior year. The City’s Special Purpose Reserves and Capital Reserves balances decreased by $12.4 million and $0.4 million respectively, while the Financial Stabilization Reserve increased by $5.4 million. Compared to the 2014 tax supported expense budget, the Financial Stabilization Reserve’s accumulated surplus is projected to be $9.4 million (including projected net interest revenue) over its targeted level of 8% of the General Revenue Fund’s adopted budget expenses. The City Council-adopted 2014 budget provides for a draw of up to $11.74 million into the General Revenue Fund. Should the Reserve’s financial position not permit the full draw, the Public Service will review the implications of the resulting shortfall to the General Revenue Fund.

Effective January 1, 2013, a new reserve was established to RESERVES track dedicated revenue for the sole purpose of funding the 400 renewal of local streets, back lanes and sidewalks. The long- term proposal, subject to annual City Council approval, is to fund the Local Street Renewal Reserve Fund by dedi- 300 cated annual 1% property tax increases over eight or nine years. In the ninth year, the funding from property tax in- 200 creases would be exchanged with the current frontage levy.

The current frontage levy is $3.75 per frontage foot, which In Millions($) is proposed to increase annually commencing in 2022, by 100 $1.00 per frontage foot for approximately 13 years.

In 2014, a similar dedicated 1% tax will be introduced to 0 fund a new Regional Street Renewal Reserve. Approximate- 2009 2010 2011 2012 2013 ly 80% of the traffic volume in the City occurs on the 1,800 n Stabilization n Special n Capital lane kilometres of regional streets. The long-term proposal, subject to annual City Council approval, is to dedicate annual 1% property tax increases for nine years, committed to the renewal of regional streets. After the ninth year, the property tax increase would drop to 0.25% to address construction inflation.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 35 Consolidated Revenue and Expense Comparisons The Consolidated Statement of Operations and Accumulated Surplus reports the City’s changes in economic resources and accumulated surplus for 2013, on a comparative basis. The Statements indicate the City increased its accumulated surplus during the year because annual revenues exceeded expenses. The statements include a consolidated budget, which provides additional transparency and accountability.

During 2013, the City recorded consolidated revenues of $1.619 billion (2012–$1.497 billion), which included government transfers and developer contributions-in-kind related to the acquisition of tangible capital assets. Consolidated expenses totaled $1.397 billion (2012–$1.300 billion). As a result, the City’s accumulated surplus increased by $0.222 billion (2012–$0.197 billion).

CONSOLIDATED REVENUES For the years Budget Actual to ended December 31 Budget Actual Actual to Actual Actual (in thousands of dollars) 2013 2013 2012 Variance Variance Taxation $ 603,944 38% $ 611,813 38% $ 587,578 39% $ 7,869 $ 24,235 Sales of services and regulatory fees 512,215 33% 507,869 31% 483,339 32% (4,346) 24,530 Government transfers - Operating 162,272 10% 161,337 10% 158,975 11% (935) 2,362 Investment, land sales and other revenues 112,117 7% 115,435 7% 73,762 5% 3,318 41,673 Revenue before Other 1,390,548 1,396,454 1,303,654 5,906 92,800 Government transfers - Capital 133,192 9% 130,921 8% 121,262 8% (2,271) 9,659 Developer contributions-in-kind 52,200 3% 91,883 6% 72,225 5% 39,683 19,658 185,392 222,804 193,487 37,412 29,317

$ 1,575,940 $ 1,619,258 $ 1,497,141 $ 43,318 $ 122,117

Revenues were higher in 2013 over 2012 by $122.1 million due to several factors. One of the major reasons for the change was increased taxation revenues. Included in taxation revenues are municipal realty taxes, which increased by $21.1 million year- over-year due to assessment roll growth and a 3.9% increase in property tax rates.

In 2013, the City adopted a new accounting standard, PS 3510 Tax Revenue. In doing so, for the first time, the City recognized as tax revenue accruals for local improvements and property taxes not billed but owing. This accounting policy change was recognized retroactively with an adjustment of $12.7 million which was made to opening accumulated surplus.

Sales of services and regulatory fees rose over the prior year due to a $5.8 million increase reported in water and sewer sales resulting from increased rates. The Transit System realized $5.6 million more in revenue mostly related to a 1.3% increase in revenue-generating passengers. Regular cash fares also increased by five cents. Solid Waste Disposal also experienced $6.7 million more revenue than the prior year, mostly related to the full year collection of the waste diversion user fee.

The increased investment, land sales and other revenues can be primarily attributed to more land sales concluding than expected.

Developer contributions-in-kind exceeded budget and the prior year mainly because of continuing land development.

Government transfers related to tangible capital assets increased in 2013, mainly because of the funding provided to The Con- vention Centre Corporation for the expansion of the RBC Convention Centre.

36 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT This year, the new PS 3410 Government Transfers applied to the City. The Public Service undertook a comprehensive review of its agreements and processes concerning transfers made and received, concluding that there were no significant accounting implications associated with this updated accounting recommendation.

CONSOLIDATED EXPENSES For the years Budget Actual to ended December 31 Budget Actual Actual to Actual Actual (in thousands of dollars) 2013 2013 2012 Variance Variance Protection and community services $ 442,962 31% $ 437,970 32% $ 416,265 32% $ 4,992 $ (21,705) Utility operations 367,386 26% 347,652 26% 338,028 26% 19,734 (9,624) Public works 287,099 20% 312,680 22% 283,042 22% (25,581) (29,638) Property and development 138,885 10% 131,994 8% 105,685 8% 6,891 (26,309) Finance and administration 74,683 5% 72,926 5% 71,390 5% 1,757 (1,536) Civic corporations 63,868 5% 54,783 4% 51,518 4% 9,085 (3,265) General government 43,108 3% 38,795 3% 33,795 3% 4,313 (5,000)

$ 1,417,991 $ 1,396,800 $ 1,299,723 $ 21,191 $ (97,077)

Consolidated expenses grew by $97.1 million or 7.5% from the previous year and was $21.2 million under budget. The protection and community services expense category includes the Police Service, Fire Paramedic Service, Community Services and Museums. The Police Service and Fire Paramedic Service departments reported additional salaries and employee benefits over the previous year.

The utility operations’ expenses were $19.7 million less than budgeted. One of the reasons for this is that costs in some of the Sewage Disposal System Fund’s programs such as the “Basement Flooding Protection Subsidy Program” and landfill tipping fees were lower than expected. As well, the utilities were under budget on their salaries and benefits expense.

Public Works experienced higher snow clearing and ice control costs compared to budget and the prior year’s results.

Property and development expenses increased over the prior year mostly due to grants made in support of Investors Group Field and the Active Living Centre on the University of Manitoba Campus, as well as the Homelessness Partnership Strategy.

CONSOLIDATED EXPENSES BY OBJECT For the years ended December 31 (in thousands of dollars) 2013 2012 Variance Salaries and benefits $ 730,133 52% $ 695,849 54% $ 34,284 Goods and services 376,614 27% 344,217 26% 32,397 Amortization 198,106 14% 188,432 15% 9,674 Interest 54,732 4% 53,587 4% 1,145 Other expenses 37,215 3% 17,638 1% 19,577

$ 1,396,800 $ 1,299,723 $ 97,077

Increases in salaries and benefits expense resulted primarily from a greater number of police officers and cadets added to the Service, negotiated pay increases and increased contributions for pension benefits. Other expenses are higher for various reasons including increased grants paid to community groups in 2013.

Goods and services expense increased over the prior year largely due to increased costs related to snow clearing and ice control.

In the 2013 budget, the Public Safety operating budget made up 44% of the tax-supported operating budget.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 37 RISKS AND RISK MITIGATION Comprehensive Asset Management The City faces a very significant infrastructure deficit to address infrastructure needs relating to roads, sidewalks, transit, buildings and parks, that will require $7.4 billion of investment over the next 10 years. To assist in addressing this issue the City is utilizing the aforementioned dedicated property taxes for local and regional roads (1% each). As well, the City has committed to comprehensive asset management as a key initiative to help address challenges associated with infrastructure maintenance and development, and to set the stage to improve performance and organizational sustainability.

Asset management can be defined as an integrated optimization process of managing infrastructure assets to minimize the total cost of owning them, while continuously delivering the service levels customers desire, at an acceptable level of risk. As well, the City has implemented processes that will result in better matching of approved capital budgets to the actual cash flows. Existing capital projects are regularly reviewed throughout the year to determine whether any surplus capital funds are available for other capital project purposes, or to minimize the impact on future capital program budgets. Capital Project Management One of the major functions of the City is the delivery on capital investments. This past year alone the City invested $0.5 billion in tangible capital assets, rehabilitating and investing in new assets such as roads, bridges and buildings. Tangible capital assets serve as key components to service delivery. While there have been recent examples of excellent project management in the delivery of major projects such as Phase 1 of the Southwest Transit Corridor, Chief Peguis Trail Extension and Disraeli Bridg- es, there have been challenges on others, for example the Fire Paramedic Station Construction Project. The City understands the value derived from strong project management and has been working diligently to mitigate against capital project delivery problems associated with time, budget and scope.

• The Public Service has been vigilant in the establishment of Major Capital Project Steering Committees who ensure project risks are being appropriately identified and addressed. As well, regular reporting to the Standing Policy Committee on Fi- nance enhances public transparency. • The City is transitioning to a system where all capital budget submissions for projects greater than $100,000 require a supporting business case that can be challenged on the basis of need (level of service and risk), assumptions and recommend- ed solutions. • During the course of the year, City Council requested the external review of the Fire Paramedic Stations Construction Project. The review provided a series of recommendations, approved by City Council. The Public Service has developed an implementation plan which includes periodic reporting to City Council. • A comprehensive Project Management manual is in the process of being finalized for implementation in 2014. This manual has been a high priority for the City, involving external consultants and City staff across the City in its development. Financial Management Plan Continued sustainability was addressed in the updated Financial Management Plan (the “Plan”) adopted by City Council on March 23, 2011. The Plan outlines the City’s strategy for guiding financial decision-making, meeting long-term obligations and improving its economic position and financial stability. It sets forth guidelines upon which current and future financial performance can be measured. One of the eight targets included in the Plan is a manageable level of debt. Thus, a review of the City’s forecasted net debt and debt servicing costs, including the financial implications of service concession arrangements, was conducted. This review established a prudent level of debt to support the City’s capital infrastructure program, while maintaining an appropriate credit rating, long-term financial flexibility and sustainability.

38 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Debt Strategy To help manage debt responsibly and transparently, on June 22, 2011, City Council approved a debt strategy for the City. The following table provides the City Council-approved limits, the debt metrics as at December 31, 2013, and the forecasted peak based on the City Council-approved borrowing and 2014 Capital Budget and Five-Year Forecast:

Debt Metrics Maximum As At December 31, 2013 Forecasted Peak Debt as a % of revenue City 85.0% 45.5% 69.4% Tax-supported and other funds 60.0% 46.4% 56.2% Self-supporting utilities 220.0% 55.4% 155.4% Debt-servicing as a % of revenue City 11.0% 7.0% 7.0% Tax-supported and other funds 10.0% 6.6% 6.6% Self-supporting utilities 20.0% 9.9% 12.6% Debt per capita City $ 2,050 $ 1,107 $ 1,825 Tax-supported and other funds $ 1,050 $ 842 $ 1,047 Self-supporting utilities $ 950 $ 226 $ 713

Note: “City” includes “tax-supported and other funds”, “Self-supporting utilities” and consolidated entities; “Tax-supported and other funds” includes Municipal Accommodations, Transit System and Fleet Management; and “Self-supporting utilities” includes Waterworks System, Sewage Disposal System and Solid Waste Disposal. “Forecasted Peak” does not account for the implications of consolidated accounting entries.

Amendments to the debt strategy are currently being reviewed by the Public Service for City Council’s consideration. Employee Benefit Programs The City provides pension, group life insurance, sick leave and severance pay benefit plans for qualified employees. The cost of these employee benefits is actuarially determined each year. These calculations use management’s best estimate of a number of assumptions including the long-term rate of investment return on plan assets, inflation, salary escalation, the discount rate used to value liabilities and certain employee-related factors such as turnover, sick leave utilization, retirement age and mor- tality. Management applies judgment in the selection of these assumptions based on past experience and on forecasts of future economic and investment conditions. As these assumptions relate to factors that are long-term in nature, they are subject to a degree of uncertainty. Differences between actual experience and the assumptions, as well as revisions to the assumptions resulting from changes in future expectations, may lead to adjustments to the City’s pension, sick leave and severance pay benefits expense reported in future financial statements.

The City has two major plans – The Winnipeg Civic Employees’ Benefits Program and the Winnipeg Police Pension Plan. The Winnipeg Civic Employees’ Benefits Program has similar characteristics to a defined contribution pension plan in that it is a multi-employer benefits program governed by an independent board of trustees and a trust agreement that limits the City’s contribution rate. This structure limits the City’s exposure to future unfunded liabilities.

Until recently the Winnipeg Civic Employees’ Benefits Program’s special-purpose reserves have been used to subsidize the cost of benefits. Since the inception of the Program, it has been recognized that these reserves would gradually diminish over time as they were drawn down, unless they were able to be replenished through actuarial surpluses generated by “excess” investment returns. In part due to the 2008 market downturn, the Program’s reserve position is currently insufficient to continue to subsidize the cost of benefits on a sustainable basis.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 39 A multi-faceted approach was approved consisting of increased employer and employee contributions and benefit adjustments, while considering forecasted investment returns and reserve balances. Contribution rate increases of one-half per cent each year for four years were approved, commencing September 1, 2011, to an average of 10% of pensionable earnings for each of the participating employers and contributing plan members. The increases in 2012 to 2014 are effective January 1st.

The future service cost of the Winnipeg Civic Employees’ Benefits Program in 2013 was 21.3% of pensionable earnings.

The Winnipeg Police Pension Plan (the “Plan”) is a defined benefit plan to which the members contribute 8% of pensionable earnings, with the City being responsible for any unfunded liabilities. As at December 31, 2013, the market value of this pension fund’s assets was $1,120.2 million (2012–$953.3 million), which is $72.5 million more (2012–$27.1 million less) than the accrued pension obligation.

The cost of benefits accruing under this Plan represent 23.1% of pensionable earnings, of which the employees’ contribute 8% of earnings. In accordance with Provincial pension legislation, the Plan’s Contribution Stabilization Reserve can be used to reduce the City’s contributions to match the employees’ contributions if this reserve is in excess of 5% of the Plan’s solvency liabilities. The balance in the Contribution Stabilization Reserve has been below this threshold since May 2012. Therefore, the City is contributing the balance of the cost - that is, 15.1% of pensionable earnings.

An actuarial valuation of the Plan as of December 31, 2013 is to be prepared and filed with the Pension Commission of Mani- toba in 2014. In addition to a calculation of the actuarial surplus or funding deficiency, in accordance with pension legislation in Manitoba the Plan must also be valued under the hypothetical scenario that the Plan is wound up and members’ benefit entitlements settled on the valuation date. It is anticipated that the actuarial valuation will show that the Plan has a solvency deficiency at December 31, 2013 under this wind-up scenario. This deficiency would need to be addressed over the next five years by the City, either through an increase in contributions starting in 2014, or by obtaining a letter of credit with face value equal to the value of additional contributions cumulatively required. City Council has previously approved the letter of credit option and has obtained a letter of credit for $39.7 million with respect to the December 2012 valuation. To the extent that the current letter of credit exceeds the revised and updated funding requirements, the face value of the letter of credit may be reduced.

The City’s group life insurance plan (“GLIP”) was established in 1975 and is comprised of two separate plans; the Civic Employ- ees’ Group Life Insurance Plan and the Police Employees’ Group Life Insurance Plan. The GLIP historically treated its income as non-taxable since the net assets were considered to be an extension of the City’s government. However as a result of enquiries from one of the GLIP’s investment managers seeking confirmation of this, the City engaged a tax professional to review the tax status of the GLIP. The review determined the GLIP may not be tax exempt and the City then voluntarily approached the Canada Revenue Agency (“CRA”) to discuss the issue. CRA informed the City that, in its view, the assets held in the two plans constitute trust funds and, therefore, the income should be considered taxable. CRA granted the GLIP tax-exempt status until the end of December 2013. The City is reviewing restructuring options for the GLIP with its tax advisors and is in discussions with CRA with a view to maintaining the GLIP`s tax-exempt status. Environmental Matters The City’s water distribution and treatment system is governed by a license issued under The Drinking Water Safety Act and the sewage treatment plants are governed by licenses issued under The Environment Act.

The 2005 to 2013 capital budgets for the utilities and their 2014 to 2018 capital forecasts anticipate $776.0 million of future debt to fund projects mandated by the Province. During 2003, at the request of the Minister of Conservation, the Clean Environment Commission (“CEC”) conducted public hearings to receive and review comments on the City’s wastewater collection and treatment improvement program. The CEC made several recommendations to upgrade and improve the wastewater collection and treatment systems, which were subsequently supported by the Minister of Conservation. In response, Manitoba Conservation issued Environment Act Licences to the City for the North End, West End, and South End Sewage Treatment Plants. In 2011, The Save Lake Winnipeg Act (Bill 46) was passed, which further enforces limits and imposes treatment options for the North End Sewage Treatment Plant. In 2013, an additional licence was issued under the Environment Act which governs combined sewers and overflow structures. With this direction, a wastewater upgrade program is underway, which will address nutrient control, combined sewer overflow mitigation and biosolids management. Based on preliminary assessments, the upgrade program is estimated to cost between $1.2 to $1.8 billion, depending on market factors and interpretation of compliance requirements.

40 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT As well, The City of Winnipeg operates one landfill, the Brady Road Landfill Site, and maintains and monitors several former landfill sites. The City estimates costs associated with future landfill closure and post-closure care requirements in the determination of its environmental liability. In estimating future landfill closure costs, management has estimated the total cost to cover, landscape and maintain the site based upon remaining life and capacity. The liability is measured on a discounted basis using the City’s average, risk adjusted, long-term, borrowing rate.

Other major funding sources for these improvements will be provided by the Environmental Projects Reserve (which had a balance of $67.3 million at December 31, 2013), the Canada Strategic Infrastructure Fund, the Green Infrastructure Fund and accumulated surplus. Labour Negotiations For the year ended December 31, 2013, 52% (2012–54%) of the City’s expenses related to salaries and employee benefits. The City’s annual average headcount was 10,143, the majority being represented by the eight unions and associations noted as follows:

Union/Association Average Annual Headcount Agreement Expiry Date ATU 1,360 January 17, 2015 CUPE 4,620 December 27, 2014 MGEU 328 February 13, 2014 UFFW 917 December 24, 2016 WAPSO 643 October 11, 2015 WFPSOA 45 August 23, 2014 WPA 1,962 December 23, 2016 WPSOA 35 December 19, 2012 Other (non-union/association) 233 Not applicable

ATU–Amalgamated Transit Union Local 1505; CUPE–Canadian Union of Public Employees Local 500; MGEU–Manitoba Government and General Employees’ Union The Paramedics of Winnipeg Local 911; UFFW–United Fire Fighters of Winnipeg Local 867; WAPSO–Winnipeg Association of Public Service Officers; WFPSOA–Winnipeg Fire Paramedic Senior Officers’ Association; WPA–Winnipeg Police Association; and WPSOA–Winnipeg Police Senior Officers’ Association

The collective agreements provide a process to revise wage and employee benefit levels through negotiations. In addition, collective bargaining disputes with certain of the bargaining units are resolved through compulsory arbitration at the request of either or both parties. Corporate Risk Management Division The City has a separate Risk Management Division reporting to the Chief Financial Officer. This division provides services designed to protect City assets. This is achieved by reducing exposure to losses through risk control measures. Working with City departments and SOA’s, this division strengthens the City’s long-term financial performance through the development and provision of a solid framework of risk management and loss control techniques based on an informed balance of risk and cost. Understanding the risks allows the City to measure and prioritize them, supporting appropriate actions to reduce losses.

FINANCIAL ACCOUNTABILITY Audit Department The City’s Audit Department plays a key role in providing independent assurance regarding the performance of civic services in support of open, transparent and accountable government. In the fall of 2012, the Audit Department was requested to manage operational reviews of the Public Works Department and the Winnipeg Police Service. In October 2013 the Operational Review of the Public Works Department was reported to City Council and in November 2013 the Operational Review of the Winnipeg Police Service was reported to the Winnipeg Police Board. Also in October 2013, an external firm hired by the Audit Depart- ment, reported to City Council on the Review of the Fire Paramedic Stations Construction Project.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 41 Fire Paramedic Station 11 opened in 2013, housing 68 members and five pieces of equipment. This represents the fourth new station in two years.

During 2013, the Audit Department also completed and reported on performance audits of Non-Monetary Real Estate Grants, a Safety Review of the City of Winnipeg Aquatics Services, and Winnipeg Police Service Civilianization. All of these reports can be found on the City’s website.

In 2013, accessibility to the City’s Fraud and Waste Hotline was expanded to include access to citizens. This initiative reflects the City’s proactive efforts to ensure and demonstrate its commitment to corporate accountability, transparency, responsibility, and sound and ethical operating practices. It supports a high level of integrity of City employees in the workplace, and also protects City property, resources and information. The Hotline is a confidential and anonymous service that accepts reports 24 hours a day, 7 days a week.

A number of significant reviews from 2013 are in progress including additional follow-up reviews on the Fire Paramedic Stations Construction Project and a review of the City’s management of real estate. Budget Process Prepared by the Public Service for consideration by City Council, budgets are used extensively throughout the City. Each year, both an operating and a capital budget are approved by City Council. Both budgets contain multi-year views. The capital budget includes six years of budget information, including the current-year adopted budget and five forecast years. The operating budget contains three years of budget information, including the current-year adopted budget and two forecast years. The 2014 budget includes a 2013 consolidated budget prepared on the same basis as the consolidated financial statements.

The budget process provides opportunity for public input. Executive Policy Committee (“EPC”), which is a committee of City Council, is responsible for budget development. The Preliminary 2013–2015 Operating Budget and the 2013 Preliminary Capi- tal Budget and 2014–2018 Five-Year Forecast were tabled at a meeting of EPC on January 9, 2013. This was the first time both budgets were tabled together. The combined tabling of the budget documents allows for better integration and streamlining of the budget process. It also facilitates an earlier adoption of the operating budget.

In 2013, the City engaged MNP LLP to conduct public consultation with a view to help shape the direction of the City’s 2014 budget. The consultation process provided many ways for citizens to have their say including public forums, workshop sessions, on-line survey, written submissions and feedback through social media, such as Twitter.

LOOKING FORWARD 2014 Operating and Capital Budgets On December 17, 2013, City Council adopted both budgets for The City of Winnipeg – the 2014 capital and operating budget. In addition, the 2015-2019 capital forecast was approved in principle and the 2015 and 2016 operating projections were received as the preliminary financial plan for those years.

The 2014 capital budget and the 2015 to 2019 five-year forecast authorizes over $2.7 billion in City capital projects, with $379.5 million earmarked in 2014. Some of the projects included in the 2014 capital budget are $84.2 million for regional and local streets renewal, including an additional $10 million in Polo Park Area Infrastructure Improvements; investments in Parks and Recreation, including $1 million for active transportation corridors, $1 million for reforestation improvements and $1 million for athletic fields improvements; and a new parks and recreation enhancement program including $6.3 million in funding. Section 284(2) of The City of Winnipeg Charter requires that before December 31st of each fiscal year, City Council must adopt a capital budget for that year and a capital forecast for the next five fiscal years.

42 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT The 2014 operating budget includes a 1.0% property tax increase dedicated solely to establish a new reserve named the Regional Street Renewal Reserve, and continues with a 1.0% increase dedicated to the Local Street Renewal Fund. As well, a 0.95% property tax increase was approved to address inflationary pressures and increased service costs. The 2014 budget plan also includes the continuation of the small business tax credit program to provide a full municipal business tax rebate for 41% of all businesses. The budget remains focused on the continuing priorities of public safety and city streets. Section 284(1) of The City of Winnipeg Charter requires City Council to approve the budget before March 31st of each fiscal year.

In 2014, the City engaged Dialogue Partners to lead its budget consultation process. “Our Budget Forward” will provide several means for citizens to give their input into the 2015 budget.

GENERAL REVENUE FUND–BUDGET

For the years ended December 31 (in thousands of dollars) 2014 2013 2012 2011 2010 Revenues Property tax $ 510,569 $ 482,885 $ 459,564 $ 435,934 $ 431,113 Government transfers 113,763 113,050 113,265 106,106 102,768 Sale of goods and services 64,486 67,788 62,761 58,146 76,142 Street renewal frontage levy 67,121 63,363 70,072 71,726 63,198 Business tax 59,688 58,371 57,584 57,584 57,584 Transfer from other funds 56,787 46,586 52,309 38,203 40,631 Regulation fees 43,227 40,852 37,634 36,540 35,385 Interest 11,228 11,432 11,394 9,245 10,142 Other 42,315 38,345 35,377 33,840 723 969,184 922,672 899,960 847,324 817,686 Expenses Police service 259,113 242,548 220,184 202,173 189,909 Public works 187,638 181,976 169,043 170,157 161,509 Fire paramedic service 167,801 167,888 154,750 143,013 137,648 Community services 122,838 111,691 112,793 100,479 103,479 Corporate 60,284 48,825 59,166 63,891 59,437 Planning, property and development 40,554 42,064 41,221 38,353 38,791 Water and waste 31,110 33,703 44,052 34,695 33,823 Corporate support services 33,038 31,147 31,312 30,899 33,079 Assessment and taxation 19,623 18,209 25,572 23,841 22,565 Street lighting 11,970 11,618 11,100 10,685 10,854 City clerk’s 13,465 10,930 10,897 10,316 11,913 Corporate finance 9,310 9,412 8,547 8,074 7,543 Other departments 12,440 12,661 11,323 10,748 7,136 969,184 922,672 899,960 847,324 817,686

$ – $ – $ – $ – $ –

Prior year figures have not been reclassified to conform with the 2014 figures.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 43 Accounting Pronouncements In 2010 and 2011, PSAB issued several pronouncements which may impact the City’s future financial statements. The pronouncements that the City is currently reviewing to determine their impact on the Statements are as follows:

In March 2010, PSAB approved Section PS 3260, Liability for Contaminated Sites for fiscal years on or after April 1, 2014. The objective of this accounting standard addresses when these obligations meet the definition of a liability; recognition and measurement criteria; and any unique disclosure requirements.

In March 2011, PSAB approved two new standards, Section PS 3450, Financial Instruments and Section PS 2601, Foreign Currency Translation, and related financial statement presentation changes to Financial Statement Presentation, Sections PS 1200 and 1201. Both standards must be adopted in the same fiscal period. The new standards are effective for fiscal years beginning on or after April 1, 2015.

REQUEST FOR INFORMATION The Financial Statement Discussion and Analysis and the Statements are designed to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances, and to show accountability for the funding it receives. Both the Annual Financial Report and the Detailed Financial Statements Document are available on-line at www.winnipeg.ca. Questions concerning the information provided in these reports should be addressed to Paul D. Olafson, CA–Corporate Controller, Corporate Finance Department, 4-510 Main Street, Winnipeg, Manitoba, R3B 1B9.

Michael Ruta, FCA Chief Financial Officer

44 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Responsibility for Financial Reporting

The accompanying Consolidated Financial Statements and all other information contained in this Annual Re- port are the responsibility of the management of The City of Winnipeg. The preparation of periodic financial statements involves the use of estimates and approximations because the precise determination of financial information frequently depends on future events. These Consolidated Financial Statements have been prepared by management within reasonable limits of materiality and within the framework of Canadian public sector accounting standards.

In carrying out its responsibilities, management maintains appropriate systems of internal and administrative controls designed to provide reasonable assurance that transactions are executed in accordance with proper authorization, that assets are properly accounted for and safeguarded, and that financial information produced is relevant and reliable.

Prior to their submission to City Council, the Consolidated Financial Statements are reviewed and approved by the Audit Committee. In addition, the Audit Committee meets periodically with management and with both the City’s internal and external auditors to approve the scope and timing of their respective audits, to review their findings and to satisfy itself that their responsibilities have been properly discharged. The Audit Committee is readily accessible to external and internal auditors.

KPMG LLP, Chartered Accountants, as the City’s appointed external auditors, have audited the Consolidated Financial Statements. The Auditors’ Report is addressed to the Mayor and members of City Council and appears on the following pages. Their opinion is based upon an examination conducted in accordance with Canadian generally accepted auditing standards, performing such tests and other procedures as they consider necessary to obtain reasonable assurance that the Consolidated Financial Statements are free of material misstatement and present fairly the financial position and results of operations of the City in accordance with Canadian generally accepted accounting principles.

Michael Ruta, FCA Chief Financial Officer May 14, 2014

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 45 Independent Auditors’ Report

To the Mayor and Members of City Council of The City of Winnipeg

We have audited the accompanying consolidated financial statements of The City of Winnipeg (“the City”), which comprise the consolidated statement of financial position as at December 31, 2013 and the consolidated statements of operations and accumulated surplus, change in net financial liabilities and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management de- termines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the City’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of The City of Winnipeg as at December 31, 2013, and the results of its consolidated operations and its consolidated cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Chartered Accountants May 14, 2014 Winnipeg, Canada

46 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Consolidated Statement of Financial Position

As at December 31 (in thousands of dollars) 2013 2012 Financial Assets Cash and cash equivalents (Note 3) $ 329,661 $ 392,041 Accounts receivable (Note 4) 260,602 208,579 Land held for resale 14,689 13,664 Investments (Note 5) 306,816 303,849 Investment in government businesses (Note 6) 35,812 31,446 947,580 949,579 Liabilities Accounts payable and accrued liabilities (Note 7) 263,681 205,789 Deferred revenue (Note 8) 61,101 55,079 Debt (Note 9) 800,396 793,161 Other liabilities (Note 10) 57,148 56,990 Accrued employee benefits and other (Note 11) 176,317 164,165 1,358,643 1,275,184 Net Financial Liabilities (411,063) (325,605) Non-Financial Assets Tangible capital assets (Note 13) 5,537,163 5,203,625 Inventories 16,365 15,977 Prepaid expenses and deferred charges 5,198 18,511 5,558,726 5,238,113 Accumulated Surplus (Note 14) $ 5,147,663 $ 4,912,508

Commitments and contingencies (Notes 10, 15 and 16)

See accompanying notes and schedules to the consolidated financial statements

Approved on behalf of the Audit Committee:

Mayor Chairperson Standing Policy Committee On Finance

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 47 Consolidated Statement of Operations and Accumulated Surplus

Budget 2013 For the years ended December 31 (in thousands of dollars) (Note 23) Actual 2013 Actual 2012 Revenues Taxation (Note 16) $ 603,944 $ 611,813 $ 587,578 Sales of services and regulatory fees (Note 17) 512,215 507,869 483,339 Government transfers (Note 18) 162,272 161,337 158,975 Investment income 37,741 37,914 40,865 Land sales and other revenue (Note 6) 74,376 77,521 32,897 Total Revenues 1,390,548 1,396,454 1,303,654 Expenses Protection and community services 442,962 437,970 416,265 Utility operations 367,386 347,652 338,028 Public works 287,099 312,680 283,042 Property and development 138,885 131,994 105,685 Finance and administration 74,683 72,926 71,390 Civic corporations 63,868 54,783 51,518 General government 43,108 38,795 33,795 Total Expenses (Note 19) 1,417,991 1,396,800 1,299,723 Annual Surplus (Deficit) Before Other (27,443) (346) 3,931 Other Government transfers related to capital (Note 18) 133,192 130,921 121,262 Developer contributions-in-kind related to capital (Note 13) 52,200 91,883 72,225 185,392 222,804 193,487 Annual Surplus $ 157,949 222,458 197,418 Accumulated Surplus, Beginning of Year As previously reported 4,912,508 4,715,090 Change in accounting policy (Note 2p) ii)) 12,697 – As restated 4,925,205 4,715,090 Accumulated Surplus, End of Year $ 5,147,663 $ 4,912,508

See accompanying notes and schedules to the consolidated financial statements

48 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Consolidated Statement of Cash Flows

For the years ended December 31 (in thousands of dollars) 2013 2012 Net Inflow (Outflow) of Cash Related to the Following Activities: Operating Annual surplus $ 222,458 $ 197,418 Non-cash charges to operations Amortization 198,106 188,432 Developer contributions-in-kind related to capital (91,883) (72,225) Other 9,251 9,862 337,932 323,487 Net change in non-cash working capital balances related to operations 36,488 (14,205) Cash provided by operating activities 374,420 309,282 Capital Acquisition of tangible capital assets (452,055) (581,768) Proceeds on disposal of tangible capital assets 11,821 4,462 Cash used in capital activities (440,234) (577,306) Financing (Increase)/Decrease in sinking fund investments 68,800 (21,509) Debenture and serial debt retired (112,450) (21,448) Sinking fund and serial debenture issued 60,000 137,784 Service concession arrangements financing (retired) (1,415) 109,362 Other (7,700) 32,820 Cash provided by financing activities 7,235 237,009 Investing Increase of investments (3,801) (14,290) Cash used in investing activities (3,801) (14,290) Decrease in cash and cash equivalents (62,380) (45,305) Cash And Cash Equivalents, Beginning of Year 392,041 437,346 Cash And Cash Equivalents, End of Year $ 329,661 $ 392,041

See accompanying notes and schedules to the consolidated financial statements

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 49 Consolidated Statement of Change In Net Financial Liabilities

For the years ended December 31 (in thousands of dollars) Budget 2013 Actual 2013 Actual 2012 Annual Surplus $ 157,949 $ 222,458 $ 197,418 Amortization of tangible capital assets 195,368 198,106 188,432 Proceeds on disposal of tangible capital assets 4,500 11,821 4,462 Loss on sale of tangible capital assets 925 473 5,269 Change in inventories, prepaid expenses and deferred charges (3,500) 12,925 (12,017) Tangible capital assets received as contributions (52,200) (91,883) (72,225) Acquisition of tangible capital assets (466,250) (452,055) (581,768) Increase In Net Financial Liabilities (163,208) (98,155) (270,429) Net Financial Liabilities Beginning of Year As previously reported (325,605) (325,605) (55,176) Change in accounting policy (Note 2p) ii)) – 12,697 – As restated (325,605) (312,908) (55,176) Net Financial Liabilities, End of Year $ (488,813) $ (411,063) $ (325,605)

See accompanying notes and schedules to the consolidated financial statements

50 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Notes to the Consolidated Financial Statements

December 31, 2013

(all tabular amounts are in thousands of dollars, unless otherwise noted) 1. Status of The City of Winnipeg The City of Winnipeg (the “City”) is a municipality that was created on January 1, 1972 pursuant to The City of Winnipeg Act, a statute of the Legislature of the Province of Manitoba (the “Province”). The City continued as a body corporate by virtue of the enactment by the Province of The City of Winnipeg Charter on January 1, 2003. The City provides municipal services such as police, fire, ambulance, public works, urban planning, parks and recreation, library and other general government operations. The City owns and operates a number of public utilities, has designated reserves and provides funding support for other entities involved in economic development, recreation, entertainment, convention, tourism and housing activities. 2. Significant Accounting Policies These consolidated financial statements have been prepared by management in accordance with Canadian public sector accounting standards. The significant accounting policies are summarized as follows: a) Basis of consolidation The consolidated financial statements include the assets, liabilities, reserves, surpluses/deficits, revenues and expenses of those City funds and governmental functions or entities which have been determined to comprise a part of the aggregate City operations based upon control exercised by the City except for the City’s government businesses which are accounted for on the modified equity basis of accounting. Inter-fund and inter-corporate balances and transactions have been eliminated.

i) Consolidated entities The organizations included in the consolidated financial statements are as follows:

• Assiniboine Park Conservancy Inc. • Winnipeg Arts Council Inc.

• CentreVenture Development Corporation • Winnipeg Enterprises Corporation

• Economic Development Winnipeg Inc. • Winnipeg Public Library Board

• The Convention Centre Corporation

ii) Government businesses The investments in North Portage Development Corporation and River Park South Developments Inc. are reported as government business partnerships and Winnipeg Housing Rehabilitation Corporation as a government business enterprise. These businesses are accounted for using the modified equity method. Under this method, the government businesses’ accounting principles are not adjusted to conform with those of the City and inter-corporate transactions are not eliminated (Note 6).

iii) Employees’ pension funds The employees’ pension funds of the City are administered on behalf of the pension plan participants by the Board of Trust- ees of the Winnipeg Civic Employees’ Benefits Program (the “EBB”) (Pension Fund) for the payment of pension benefits and accordingly are not included in the consolidated financial statements.

iv) Group life insurance funds The group life insurance funds of the City are administered by the EBB for the payment of life insurance and accordingly are not included in the consolidated financial statements. b) Basis of accounting The consolidated financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting re- cords revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the creation of a legal obligation to pay.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 51 2. Significant Accounting Policies (continued) c) Cash equivalents Cash equivalents consist of Crown corporation bonds; Canada treasury bills; provincial government bonds; City of Winnipeg municipal bonds; other municipal bonds; schedule 1 bank bonds and bankers’ acceptances; schedule 2 bankers’ acceptances; and asset-backed commercial paper. Cash equivalents are recorded at cost, which approximates their quoted market value, and are redeemable on demand.

d) Land held for resale Land held for resale is recorded at the lower of cost and net realizable value. Cost includes amounts for land acquisition and improvements to prepare the land for sale or servicing.

e) Investments Bonds are carried at amortized cost. Discounts and premiums arising on the purchase of these investments are amortized over the remaining terms to maturity with annual amortization computed at amounts which, when combined with actual income received, result in a constant effective yield on the amortized book value.

f) Unamortized premium on debt Debt is reported at face value and is adjusted by premiums which are amortized on a straight-line basis over the term to maturity of the respective debt instrument. The corresponding amortization is recorded as interest expense.

g) Solid waste landfills The obligation to close and maintain solid waste landfill sites is based on estimated future expenses in current dollars, adjusted for estimated inflation, and is charged to expenses as the landfill site’s capacity is used.

h) Environmental provisions The City provides for the cost of compliance with environmental legislation when conditions are identified which indicate non-compliance with environmental legislation and costs can be reasonably determined. The estimated amounts of future res- toration costs are reviewed regularly, based on available information and governing legislation.

i) Deferred revenue Government transfers, contributions and other amounts are received from third parties pursuant to legislation, regulation or agreement and may only be used in the conduct of certain programs, in the completion of specific work or for the acquisition and construction of tangible capital assets. In addition, certain user charges and fees are collected for which the related services have yet to be performed. Revenue is recognized in the period when the related expenses are incurred, services performed or the tangible capital assets are acquired.

j) Employee benefit plans The Winnipeg Civic Employees’ Benefits Program is a multi-employer contributory defined benefit program and accordingly contributions are expensed as incurred. The costs of other pensions and other retirement benefits have been accounted for based on actuarially determined amounts using the projected benefit method prorated on services and management’s best estimate of retirement ages of employees, salary escalation and plan investment performance. Actuarial gains and losses are amortized on a straight-line basis over the average remaining service period.

In the case of the Winnipeg Police Pension Plan, this plan’s by-law provides that, in the event of a funding surplus or deficiency, within certain prescribed constraints, the contribution stabilization reserve will be utilized and amendments made to the rate of cost-of-living adjustments to pensions according to specific rules set out in the by-law. Consequently, actuarial gains and losses are recognized immediately to the extent that they are offset by changes in the contribution stabilization reserve and changes in the plan’s accrued benefit obligation for future cost-of-living adjustments to pensions.

52 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 2. Significant Accounting Policies (continued) k) Non-financial assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the annual surplus, provides the consolidated change in net financial liabilities for the year.

i) Tangible capital assets Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of tangible capital assets is amortized on a straight-line basis over their estimated useful lives as follows:

Buildings 10 to 50 years Vehicles Transit buses 18 years Other vehicles 5 to 10 years Computer hardware and software 5 to 10 years Other Machinery and equipment 10 years Land improvements 10 to 30 years Water and waste plants and facilities Underground networks 50 to 100 years Sewage treatment plants and lift stations 50 to 75 years Water pumping stations and reservoirs 50 to 75 years Flood stations and other infrastructure 50 to 75 years Transportation Roads 10 to 50 years Bridges and other structures 25 to 75 years

Assets under construction are not amortized until the asset is available for productive use.

In certain circumstances, capital project work is charged an administration fee equal to 1% of specific costs of the project to a maximum of $100 thousand on any individual project. In addition, interim financing charges of 2% are also capitalized as part of the project cost funded by the City.

a) Contributions of tangible capital assets Developer-contributed tangible capital assets are recorded at their fair value at the date of receipt. The contribution is recorded as revenue.

b) Leases Leases are classified as capital or operating leases. Leases which transfer substantially all of the benefits and risks inci- dental to ownership of property are accounted for as capital leases. All other leases are accounted for as operating leases and the related lease payments are charged to expenses as incurred.

c) Service concession arrangements Service concession arrangements are long-term performance-based approaches for procuring public infrastructure, where the City contracts with a private sector partner who assumes a major share of the responsibility for the delivery of the infrastructure. The operator is compensated over the period of the arrangements. The arrangements are governed by a contract that sets out performance standards and mechanisms for adjusting prices. The contract is binding on the parties to the arrangement and obliges the operator to maintain the tangible capital asset on behalf of the City.

In the case of tangible capital assets, where the operator bears the construction risk, the timing of initial recognition of the service concession asset by the City will be when the tangible capital asset is available for productive use.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 53 2. Significant Accounting Policies (continued) ii) Inventories Inventories held for consumption are recorded at the lower of cost and replacement cost.

l) Tax Revenue Tax revenues result from non-exchange transactions that are compulsorily paid to governments in accordance with the laws and regulations established to provide revenue to the government for public services. The revenue is recognized when the tax has been authorized and the taxable event has occurred.

The City is required by The Public Schools Act to bill, collect and remit provincial education support levies in respect of residential and other properties on behalf of the Province, and school division special levies on behalf of school divisions. The City has no jurisdiction or control over the school divisions’ operations or their mill rate increases. Therefore, no tax revenue is recognized in these consolidated financial statements for amounts collected on behalf of school divisions, nor are the revenues, expenses, assets and liabilities with respect to the operations of the school boards.

Property taxation revenue is based on market assessments that are subject to appeal therefore, a provision has been estimated for assessment appeals outstanding as at December 31. As well, estimates have been made of property tax amounts owing for prior years that have not yet been assessed at the end of the current fiscal year. By their nature, these estimates are subject to measurement uncertainty and the impact on future financial statements could be material (Note 2n).

m) Government transfers Government transfers are transfers of monetary assets or tangible capital assets to or from the City that are not the result of an exchange transaction, a direct financial return, or expected to be repaid in the future.

Government transfers are recognized in the consolidated financial statements as revenue in the financial period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met including performance requirements, and reasonable estimates of the amounts can be determined.

Stipulations attached to transfers to the City may give rise to an obligation on the City’s behalf in which case a liability will be recognized in the consolidated financial statements.

n) Estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions on such areas as employee benefits, the useful life of tangible capital assets, assessment appeals, lawsuits and environmental provisions. These estimates and assumptions are based on the City’s best information and judgment and may differ significantly from actual results.

o) Budget The 2013 budget is included on the consolidated statements of operations and accumulated surplus and change in net financial liabilities. The budget is compiled from the City Council-approved Operating Budget, estimates for controlled entities, adjustments to report the budget on a full accrual basis including capital revenue adjustments, assets capitalized on the statement of financial position, amortization of tangible capital assets and accruals for unfunded liabilities and administrative adjustments to provide for proper comparison to actuals presented herein.

p) Accounting Policy Changes i) Government Transfers The Public Sector Accounting Board issued an updated standard, PS 3410 Government Transfers. The new standard applies to the City for the fiscal year beginning January 1, 2013 and, as such, has been utilized for the preparation of these consolidated financial statements. Application of this standard has not resulted in any change to the opening balance of accumulated surplus.

54 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 2. Significant Accounting Policies (continued) ii) Tax revenues The Public Sector Accounting Board also issued a new accounting standard, PS 3510 Tax Revenue. The new standard applies to the City for the fiscal year beginning January 1, 2013 and, as such, has been utilized for the preparation of these consolidated financial statements. As permitted, this standard has been applied retroactively with an adjustment to the opening balance of the accumulated surplus. The impacts are the first-time accrual for local improvements and for property taxes not billed but owing as of the end of the fiscal year. 3. Cash and Cash Equivalents

2013 2012 Cash $ 19,334 $ 11,894 Cash equivalents 310,327 380,147

$ 329,661 $ 392,041

The average effective interest rate for cash equivalents at December 31, 2013 is 1.3% (2012–1.3%).

Cash and cash equivalents exclude $315.5 million (2012–$109.7 million) which has been received from various entities including EBB. The funds are invested on a pooled basis to obtain maximum investment returns.

Cash received for interest during the year is $37.8 million (2012–$41.2 million). 4. Accounts Receivable

2013 2012 Property, payments-in-lieu and business taxes receivable $ 49,592 $ 37,960 Allowance for property, payments-in-lieu and business tax arrears (3,694) (3,351) 45,898 34,609 Trade accounts and other receivables 148,427 110,503 Province of Manitoba 60,623 51,182 Government of Canada 15,933 21,280 Allowance for doubtful accounts (10,279) (8,995) 214,704 173,970

$ 260,602 $ 208,579

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 55 5. Investments

2013 2012 Marketable securities Provincial bonds and bond coupons $ 5,750 $ 6,713 Municipal bonds 68,482 75,726 74,232 82,439 Manitoba Hydro long-term receivable 220,238 220,238 Other 12,346 1,172

$ 306,816 $ 303,849

a) Marketable securities The aggregate market value of marketable securities at December 31, 2013 is $73.9 million (2012–$86.5 million) and their maturity dates range from 2014 to 2043.

b) Manitoba Hydro long-term receivable On February 27, 2002, City Council approved Manitoba Hydro’s proposal to purchase Winnipeg Hydro. The terms of the proposal included payments to the City of $25 million per annum commencing in 2002 and for the next four years thereafter; $20 million per annum for years six through nine; and $16 million per annum for years ten and continuing in perpetuity.

The Manitoba Hydro investment represents the sum of the discounted future cash flows of the above annual payments to the City, discounted at the City’s historical average long-term borrowing rate. 6. Investment in Government Businesses a) North Portage Development Corporation North Portage Development Corporation (the “NPDC”) is a government partnership that is owned equally by the Government of Canada, the Province of Manitoba and The City of Winnipeg. The mission of NPDC is to act as a catalyst, encouraging activities for people in the downtown through public and private partnerships and to work to ensure financial self-sufficiency. NPDC is responsible for the continuing renewal and stewardship of two sites in Winnipeg’s downtown: the North Portage area and The Forks. NPDC is involved in certain business and core activities regarding the ownership, development and management of its two sites that include land investment properties and public amenities.

56 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 6. Investment in Government Businesses (continued) The condensed supplementary financial information of NPDC is as follows:

2013 2012 Financial position Property, plant and equipment and investment in properties and infrastructure enhancements $ 71,248 $ 75,171 Short-term investments 14,878 12,536 Other assets 2,037 3,565 $ 88,163 $ 91,272 Deferred contributions from shareholders $ 15,961 $ 17,179 Long-term mortgage payable 11,355 11,753 Current and other liabilities 4,305 5,337 31,621 34,269 Net equity 56,542 57,003 $ 88,163 $ 91,272 Comprehensive income Revenues $ 10,826 $ 11,075 Expenses 9,282 9,472 Operating income before the following 1,544 1,603 Interest expense (691) (718) Amortization (2,532) (2,381) Other 2,616 883 Discontinued Operations (1,398) 0

Net loss for the year $ (461) $ (613) b) River Park South Developments Inc. On April 21, 2011, the City and Qualico Developments (Winnipeg) Ltd. entered into an agreement to jointly develop and sell residential land owned by the partners in the River Park South community of Winnipeg.

The condensed supplementary financial information of River Park South Developments Inc. is as follows:

2013 2012 Financial position Assets $ 33,797 $ 27,004 Liabilities and Equity $ 33,797 $ 27,004 Comprehensive income Land sales $ 18,244 $ 19,212 Cost of sales 8,836 10,032 Operating income before the following 9,408 9,180 Interest and other income 234 149 Other expenses and adjustments (1,438) (1,359)

Net income for the year $ 8,204 $ 7,970 c) Winnipeg Housing Rehabilitation Corporation Winnipeg Housing Rehabilitation Corporation (the “WHRC”) is a non-profit developer and manager of affordable housing in Winnipeg. WHRC was founded by the City. Pursuant to operating agreements, WHRC receives subsidies from Canada Mort- gage and Housing Corporation and Manitoba Housing.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 57 6. Investment in Government Businesses (continued) The condensed supplementary financial information of WHRC is as follows:

2013 2012 Financial position Capital assets $ 25,457 $ 26,925 Current and other assets 7,258 6,505 $ 32,715 $ 33,430 Long-term debt $ 23,150 $ 24,568 Current and other liabilities 4,304 4,019 27,454 28,587 Replacement Reserves 4,377 4,011 WHRC Building and Acquisition Reserve 1,046 1,026 Unrestricted deficit (162) (194) 5,261 4,843 $ 32,715 $ 33,430 Results of operations Revenues $ 7,784 $ 7,656 Expenses 7,752 7,568 Excess of revenues over expenses for the year 32 88 Change to Replacement Reserves during the year 366 231 Change to WHRC Building and Acquisition Reserve during the year 20 33

Net income for the year $ 418 $ 352

During the year, the City paid WHRC an operating grant of $195 thousand (2012–$200 thousand). In addition, the City has guaranteed WHRC’s operating line of credit to a value of $2.0 million (2012–$2.0 million). As at March 31, 2013, WHRC has utilized $167 thousand of this line of credit (2012–$585 thousand).

Summary of investment in government businesses

2013 2012 North Portage Development Corporation (1/3 share) $ 18,847 $ 19,001 River Park South Developments Inc. (1/2 share) 11,704 7,602 Winnipeg Housing Rehabilitation Corporation 5,261 4,843 $ 35,812 $ 31,446

Summary of results of operations

2013 2012 North Portage Development Corporation (1/3 share) $ (154) $ (291) River Park South Developments Inc. (1/2 share) 4,102 3,985 Winnipeg Housing Rehabilitation Corporation 418 352

$ 4,366 $ 4,046

The results of operations are included in the Consolidated Statement of Operations and Accumulated Surplus as land sales and other revenue. NPDC and WHRC report their activities based on a March 31 year-end.

58 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 7. Accounts Payable and Accrued Liabilities

2013 2012 Accrued liabilities $ 137,466 $ 97,688 Trade accounts payable 116,459 94,843 Accrued interest payable 9,756 13,258

$ 263,681 $ 205,789

8. Deferred Revenue

2013 2012 Federal gas tax transfer $ 22,900 $ 28,924 Province of Manitoba 21,997 15,433 Other 16,204 10,722

$ 61,101 $ 55,079

9. Debt Sinking fund debentures outstanding

Term Maturity Date Rate of Interest Series By-Law No. 2013 2012 1993-2013 Feb. 11 9.375 VN 6090/93 $ – $ 90,000 1994-2014 Jan. 20 8.000 VQ 6300/94 85,000 85,000 1995-2015 May 12 9.125 VR 6620/95 88,000 88,000 1997-2017 Nov. 17 6.250 VU 7000/97 30,000 30,000 2006-2036 July 17 5.200 VZ 183/04 and 72/06 60,000 60,000 2008-2036 July 17 5.200 VZ 72/06B and 32/07 100,000 100,000 2010-2041 June 3 5.150 WB 183/08 60,000 60,000 2011-2051 Nov. 15 4.300 WC 72/06, 183/08 and 150/09 50,000 50,000 2012-2051 Nov. 15 3.853 WC 93/11 50,000 50,000 2012-2051 Nov. 15 3.759 WC 120/09, 93/11 and 138/11 75,000 75,000 2013-2051 Nov. 15 4.391 WC 93/11 and 84/13 60,000 – 658,000 688,000 Equity in The Sinking Funds (Notes 9a and b) (195,237) (264,037) Net sinking fund debentures outstanding 462,763 423,963 Other debt outstanding Serial and installment debt issued by the City with varying maturities up to 2019 and a weighted average interest rate of 4.52% (2012–4.70%) 34,621 56,884 Bank loans, Province and other with varying maturities up to 2026 and a weighted average interest rate of 3.04% (2012–2.90%) 109,263 116,427 Capital lease obligations (Note 9c) 26,056 26,592 Service concession arrangement obligations (Notes 9d and 15d) 157,344 158,759 790,047 782,625 Unamortized premium on debt (Note 9e) 10,349 10,536

$ 800,396 $ 793,161

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 59 9. Debt (continued) Debt segregated by fund/organization:

2013 2012 General Capital Fund $ 456,709 $ 430,019 Waterworks System 147,823 154,529 Transit System 87,872 91,180 Special operating agencies and other 84,394 86,525 Solid Waste Disposal 11,651 13,025 Sewage Disposal System 1,598 7,347

$ 790,047 $ 782,625

Debt to be retired over the next five years:

2014 2015 2016 2017 2018 2019+ Sinking fund debentures $ 85,000 $ 88,000 $ – $ 30,000 $ – $ 455,000 Other debt 38,713 21,529 28,945 16,988 16,350 204,759

$ 123,713 $ 109,529 $ 28,945 $ 46,988 $ 16,350 $ 659,759

a) As at December 31, 2013, sinking fund assets have a market value of $208.1 million (2011–$270.9 million). Sinking fund assets are mainly comprised of government and government-guaranteed bonds and debentures, which include City of Winnipeg debentures with a carrying value of $28.3 million (2012–$28.1 million) and a market value of $28.7 million (2012–$29.4 million).

b) The City of Winnipeg Charter requires the City to make annual payments to The Sinking Fund Trustees of The City of Winnipeg on debt outstanding as at December 31, 2002. Sinking fund arrangements after December 31, 2002 are managed in a separate fund by the City. The City is currently paying between 1 to 3% on its outstanding sinking fund debentures. These annual payments are invested for the retirement of the debenture issues on their maturity dates.

c) Future minimum lease payments together with the balance of the obligation due under the capital leases are as follows:

Capital Leases 2014 $ 2,476 2015 2,476 2016 2,476 2017 2,502 2018 2,553 Thereafter 35,026 Total future minimum lease payments 47,509 Amount representing interest at a weighted average rate of 8.18% (21,453)

Capital lease obligations $ 26,056

60 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 9. Debt (continued) d) Service concession arrangement obligations are as follows:

2013 2012 DBF2 Limited Partnership–Chief Peguis Trail Extension $ 49,120 $ 49,577 Plenary Roads Winnipeg GP–Disraeli Bridges 108,224 109,182

$ 157,344 $ 158,759

Chief Peguis Trail Extension The City has entered into a fixed-price contract with DBF2 Limited Partnership (“DBF2”) to design, build, finance and maintain the Chief Peguis Trail Extension. The contract was executed in September 2010 and terminates in January 2042. The Chief Peguis Trail Extension was commissioned for use in 2011.

The $108.5 million project will have been financed through a grant of $23.9 million from PPP Canada, a Provincial government transfer of $9.0 million, sinking fund debentures (Series WC) of $18.7 million, a $50.0 million service concession arrangement obligation to DBF2 and cash consideration paid by the City of $6.9 million. As at December 31, 2013, $105.1 million was capitalized (Note 13). Monthly capital and interest performance-based payments totalling $4.5 million annually, for the service concession arrangement obligation to DBF2 commenced in January 2012, commensurate with commissioning the project and are payable to termination of the contract with DBF2.

Overall, taking into account the various forms of funding and financing for the project, the effective interest rate incurred by the City based on the full $108.5 million project is 4.6%. Specifically, the sinking fund debt and service concession arrangement obligation to DBF2 bear a combined weighted average interest rate of 7.2%.

The City will also make DBF2 a monthly performance-based maintenance payment as disclosed in Note 15d.

Disraeli Bridges The City has entered into a fixed-price contract with Plenary Roads Winnipeg GP (“PRW”) to design, build, finance and maintain the Disraeli Bridges Project. The contract was executed in March 2010 and terminates in October 2042. The Disraeli Bridges Project was commissioned for use in 2012 with decommissioning of the old structures and construction of a separate pedestrian bridge following in 2013.

The $195.0 million project will have been financed through sinking fund debentures (Series WC) of $25.0 million, a $109.4 million service concession arrangement obligation to PRW, Federal gas tax revenue of $50.0 million, and cash consideration paid by the City of $10.6 million. As at December 31, 2013, $188.9 million was capitalized for commissioned works (Note 13). A total amount of $19.5 million was capitalized for the pedestrian bridge and final roadwork completed in 2013. Monthly capital and interest performance-based payments totalling $9.8 million annually, for the service concession arrangement obligation to PRW commenced in October 2012, commensurate with commissioning the project and are payable to termination of the contract with PRW.

Overall, taking into account the various forms of funding and financing for the project, the effective interest rate incurred by the City based on the $195.0 million project is 5.2%. Specifically, the sinking fund debt and service concession arrangement obligation to PRW bear a combined weighted average interest rate of 7.5%.

The City will also make PRW a monthly performance-based maintenance payment as disclosed in Note 15d. e) Included in the Consolidated Statement of Financial Position are investments of $12.5 million (2012–$12.8 million) that will be used for making semi-annual debt service payments on the sinking fund debentures issued in 2012. f) Interest on debt recorded in the Consolidated Statement of Operations and Accumulated Surplus in 2013 is $54.7 million (2012–$53.6 million) and cash paid for interest during the year is $58.2 million (2012–$53.8 million).

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 61 10. Other Liabilities

2013 2012 Environmental liabilities $ 27,127 $ 20,000 Developer deposits 11,071 8,599 Expropriation and other 18,950 28,391

$ 57,148 $ 56,990

Included in environmental liabilities is $25.1 million (2012–$19.3 million) for the estimated total landfill closure and post-closure care expenses. The estimated liability for these expenses is recognized as the landfill site’s capacity is used. Estimated total expenses represent the sum of the discounted future cash flows for closure and post-closure care activities discounted at the City’s average, risk adjusted, long term borrowing rate of 6.0% (2012–6.0%).

Landfill closure and post-closure care requirements have been defined in accordance with The Environment Act and include final covering and landscaping of the landfill, pumping of ground, methane gas and leachate management, and ongoing environmental monitoring, site inspection and maintenance. The reported liability is based on estimates and assumptions with respect to events extending over a 100-year period using the best information available to management. Future events may result in significant changes to the estimated total expenses, capacity used or total capacity and the estimated liability, and would be recognized prospectively, as a change in estimate, when applicable.

The estimated capacity of the City’s one remaining landfill, the Brady Road Landfill Site, is 95% of its total capacity and its remaining life is approximately 95 years, after which perpetual post-closure maintenance is required.

The Brady Landfill Site Rehabilitation Reserve was established for the purpose of providing funding for the future development of the Brady Road Landfill Site. The reserve is financed through a transfer from the Solid Waste Disposal Fund and is based upon residential and commercial tonnes. As at December 31, 2013, the reserve had a balance of $5.0 million (2012–$4.6 million). 11. Accrued Employee Benefits and Other

2013 2012 Retirement allowance–accrued obligation $ 94,702 $ 94,554 Unamortized net actuarial loss (5,406) (8,295) Retirement allowance–accrued liability 89,296 86,259 Vacation 48,159 46,392 Workers’ compensation 22,969 16,963 Compensated absences 9,410 8,568 Other 6,483 5,983

$ 176,317 $ 164,165

Under the retirement allowance programs, qualifying employees become entitled to a cash payment upon retirement, death or termination of service under certain conditions (not resignation). In addition, adjustments arising from plan amendment, changes in assumptions, and experience gains and losses are amortized on a straight-line basis over 13.0 years, which represents the expected average remaining service life of the employee group. Amortization is calculated beginning in the year following the year of occurrence of the actuarial gains or losses.

The City measures its accrued retirement allowance obligation as at December 31 of each year. An actuarial valuation of the obligation was calculated as of July 31, 2011. The results of this valuation were extrapolated to the financial reporting date of December 31, 2013 using year-end assumptions.

62 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 11. Accrued Employee Benefits and Other (continued) Information about the City’s retirement allowance benefit plan is as follows:

2013 2012 Retirement allowance–accrued liability Balance, beginning of year $ 86,259 $ 83,851 Current service cost 5,309 5,130 Interest cost 3,465 3,471 Amortization of net actuarial loss 1,513 1,745 Benefit payments (7,250) (7,938)

Balance, end of year $ 89,296 $ 86,259

Retirement allowance expense consists of the following:

2013 2012 Current service cost $ 5,309 $ 5,130 Interest cost 3,465 3,471 Amortization of net actuarial loss 1,513 1,745

$ 10,287 $ 10,346

The significant actuarial assumptions adopted in measuring the retirement allowance obligation for the year ended December 31 are as follows:

2013 2012 Discount rate on liability 3.70% 3.60%

General increases in pay 3.50% 3.50%

Demographic assumptions such as utilization of sick leave credits, salary increases as a result of increments and promotion, continuation of employment and the probability of retirement or death in future years are based on employment experience.

Compensated absences represent benefits expected to be paid during future employee absences in respect of sick leave days earned in previous years.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 63 12. Pension Costs and Obligations a) Winnipeg Civic Employees’ Benefits Program The Winnipeg Civic Employees’ Benefits Program is a multi-employer benefits program governed by an independent board of trustees and a trust agreement that limits the City’s contribution rate. Accordingly, the Program is accounted for similar to a defined contribution benefits program. The Program provides pension and disability benefits to all City of Winnipeg employees, other than police officers, and to employees of certain other participating employers.

During 2013, members contributed 9.0% of their Canada Pension Plan earnings and 11.2% of pensionable earnings in excess of Canada Pension Plan earnings. Members’ contribution rates are scheduled to increase to 9.5% of their Canada Pension Plan earnings and 11.8% of pensionable earnings in excess of Canada Pension Plan earnings in 2014 and future years. The City and participating employers are required to make matching contributions.

An actuarial valuation of the Program was prepared as at December 31, 2012, which indicated an excess of actuarial value of program assets over actuarial liabilities of $115.6 million. The Pension Trust Agreement specifies how actuarial surpluses can be used but does not attribute actuarial surpluses to individual employers. However, a portion of actuarial surpluses is allocated to a City Account that the City and other participating employers may use to finance reductions in their contributions. In the event of unfavourable financial experience, additional amounts may be transferred from the City Account to cover a funding deficiency.

The balance of the City Account at December 31, 2013 was $54.0 million (2012–$60.1 million).

Total contributions by the City to the Program in 2013 were $26.1 million (2012–$ 23.1 million), which were expensed as incurred.

b) Winnipeg Police Pension Plan The Winnipeg Police Pension Plan is a contributory defined benefit plan, providing pension benefits to police officers. Members are required to make contributions at the rate of 8% of pensionable earnings. The City is required to finance the cost of the plan’s benefits other than cost-of-living adjustments and to contribute 1% of pensionable earnings in respect of cost-of-living adjustments. A contribution stabilization reserve has been established to maintain the City’s contribution rate at 8% of pensionable earnings, when permitted under provincial pension legislation. The Plan incorporates a risk-sharing arrangement under which actuarial surpluses are first allocated to maintain cost-of-living adjustments to pensions at 75% of the inflation rate and maintain the contribution stabilization reserve and thereafter are shared equally between the City and Plan members. Funding deficiencies are resolved through reductions in the contribution stabilization reserve and the rate of cost-of-living adjustments to pensions.

An actuarial valuation of the Plan was prepared as of December 31, 2012. The valuation revealed a funding deficiency, which, in accordance with the terms of the Plan, was resolved through a reduction in the contribution stabilization reserve and by reducing the rate of cost-of-living adjustments to pensions from 66.2% to 47.0% of the inflation rate.

An actuarial valuation of the Plan as of December 31, 2013 is to be prepared and filed with the Pension Commission of Man- itoba in 2014. In addition to a calculation of the actuarial surplus or funding deficiency, in accordance with pension legislation in Manitoba, the Plan must also be valued under the hypothetical scenario that the Plan is wound up and members’ benefit entitlements settled on the valuation date. It is anticipated that the actuarial valuation will show that the Plan has a solvency deficiency at December 31, 2013 under this wind-up scenario, which would need to be addressed by the City over a period not to exceed five years either by an increase in contributions starting in 2014, or by obtaining a letter of credit with face value equal to the value of additional contributions cumulatively otherwise required. City Council has previously approved the letter of credit option and the City has obtained a letter of credit with respect to December 2012 valuation. To the extent that the current letter of credit exceeds the revised and updated funding requirements, the face value of the letter of credit may be reduced. At December 31, 2013, the letter of credit amount was $39.7 million.

64 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 12. Pension Costs and Obligations (continued) The results of the December 31, 2012 actuarial valuation of the Plan were extrapolated to December 31, 2013. In accordance with the terms of the Plan, extrapolated deficiencies are resolved through transfers from the contribution stabilization reserve and reductions in the rate of cost-of-living adjustments to pensions. The principal long-term assumptions on which the extrapolation was based were: discount rate of 6.00% per year (2012–6.00%); inflation rate of 2.00% per year (2012–2.00%); and general pay increases of 3.25% per year (2012–3.50%). The accrued pension obligation was valued using the projected benefit method pro-rated on services. Based on this valuation and extrapolation, the Plan’s assets, accrued pension obligation and pension expenses are as follows:

2013 2012 Plan assets: Fair value, beginning of year $ 953,291 $ 894,619 Employer contributions 20,954 17,129 Employee contributions and transfers 11,880 11,376 Benefits and expenses paid (43,122) (43,229) Net investment income 177,259 73,396 Fair value, end of year 1,120,262 953,291 Actuarial adjustment (72,467) 27,121 Actuarial value, end of year $ 1,047,795 $ 980,412 Accrued pension obligation: Beginning of year $ 980,412 $ 933,487 Current period benefit cost 33,429 32,689 Benefits and expenses paid (43,122) (43,229) Interest on accrued pension obligation 58,534 57,459 Actuarial loss 18,542 6 End of year $ 1,047,795 $ 980,412 Expenses related to pensions: Current period benefit cost $ 33,429 $ 32,689 Amortization of actuarial gains (613) (2,546) Less: employee contributions and transfers (11,880) (11,376) Pension benefit expense 20,936 18,767 Interest on accrued benefit obligation 58,534 57,459 Expected return on plan assets (58,516) (59,097) Pension interest expense 18 (1,638)

Total expenses related to pensions $ 20,954 $ 17,129

The actuarial value of the Plan’s assets is determined by averaging over five years differences between the pension fund’s net investment income and expected investment income based on the expected rate of return.

Total contributions made by the City to the Plan in 2013 were $21.0 million (2012–$17.1 million). Total employee contributions to the Plan in 2013 were $11.9 million (2012–$11.4 million). Benefits paid from the Plan in 2013 were $42.2 million (2012–$42.2 million).

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 65 12. Pension Costs and Obligations (continued) The expected rate of return on Plan assets in 2013 was 6.00% (2012–6.25%). The actual rate of return, net of investment expenses, on the fair value of Plan assets in 2013 was 18.70% (2012–8.27%).

Since the City’s contribution to the Plan each year are equal to its pension expense, no accrued pension asset or liability is reflected in the Consolidated Statement of Financial Position. As noted above, the Plan provides that within certain prescribed constraints, in the event of a funding deficiency, a transfer from the contribution stabilization reserve and amendments to the rate of cost- of-living adjustments to pensions will be utilized to resolve the deficiency. The above extrapolation anticipates that the funding deficiency at December 31, 2013 will be resolved through a further reduction in the rate of cost-of-living adjustment.

c) Councillors’ Pension Plan i) Pension Plan Established Under By-Law Number 3553/83 On November 2, 1992, the pension plan provided to members of City Council was terminated, thereby not allowing new members to be accepted to the plan and current members being entitled to receive retirement benefits once they become eligible. In 2013, the City paid out $0.3 million (2012–$0.4 million). An actuarially determined pension obligation of $3.9 million (2012–$3.9 million) has been reflected in the Consolidated Statement of Financial Position.

ii) Pension Plan Established Under By-Law Number 7869/01 On November 22, 2000, City Council adopted the policy that effective January 1, 2001, a Council Pension Plan be created for all members of City Council for The City of Winnipeg.

d) Group Life Insurance Plan Employees of the City who are members of the Civic Employees’ Pension Plan or the Winnipeg Police Pension Plan must become members of the Civic Employees’ Group Life Insurance Plan and the Police Employees’ Group Life Insurance Plan, respectively. These plans provide life insurance for members while employed and can be continued into retirement at the employees’ option. Plan members and the City share the cost of basic life insurance. An actuarial valuation indicated that this post-retirement liability is fully funded.

An actuarial valuation of the plan was prepared as of December 31, 2010 and the results were extrapolated to December 31, 2013. The principal long-term assumptions on which the valuation was based were: discount rate of 4.30% per year (2012–3.80%); and general pay increases of 3.50% per year (2012–3.50%). The accrued group life insurance obligation was valued using the projected benefit method pro-rated on services. Based on this valuation and extrapolation, the funded status of the plan is as follows:

2013 2012 Group life insurance plan assets, at actuarial value $ 140,793 $ 135,613

Accrued post-retirement life insurance obligations $ 116,087 $ 119,377

66 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 13. Tangible Capital Assets

Net Book Value

2013 2012 General Land $ 211,130 $ 211,731 Buildings 386,293 321,653 Vehicles 179,281 176,634 Computer 33,057 35,271 Other 200,427 164,657 Infrastructure Plants and facilities 587,634 594,574 Roads 1,129,322 1,102,727 Underground and other networks 1,931,198 1,864,604 Bridges and other structures 541,214 522,596 5,199,556 4,994,447 Assets under construction 337,607 209,178

$ 5,537,163 $ 5,203,625

For additional information, see the Consolidated Schedule of Tangible Capital Assets (Schedule 1).

During the year, $nil (2012–$nil) of tangible capital assets were written-down. Interest capitalized during 2013 was $3.4 million (2012–$3.0 million). In addition, roads and underground networks contributed to the City totalled $91.9 million in 2013 (2012–$72.2 million) and were capitalized at their fair value at the time of receipt.

Included in the above net book values are $286.0 million (2012–$274.1 million) of tangible capital assets that were acquired through service concession arrangements.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 67 14. Accumulated Surplus Accumulated surplus consists of individual fund surplus/(deficit) and reserves as follows:

2013 2012 Invested in tangible capital assets $ 4,637,548 $ 4,397,884 Reserves Capital Reserves Environmental Projects 67,338 58,927 Sewer System Rehabilitation 17,821 29,630 Rapid Transit Infrastructure 8,856 9,882 Transit Bus Replacement 7,157 6,678 Other 13,376 9,790 114,548 114,907 Special Purpose Reserves Perpetual Maintenance Fund–Brookside Cemetery 14,430 13,935 Destination Marketing 11,568 12,729 Insurance (Note 20) 7,980 6,604 Land Operating 7,071 4,803 Multi-Family Dwelling Tax Investment 7,006 6,073 Land Dedication 5,049 4,850 Commitment 4,093 4,598 General Purpose 3,204 15,921 Other 17,462 20,706 77,863 90,219 Stabilization Reserve Financial Stabilization 85,753 80,404 Total Reserves 278,164 285,530 Surplus Manitoba Hydro long-term receivable 220,238 220,238 Sewage Disposal System 77,573 76,878 Waterworks System 44,324 56,422 North Portage Development Corporation 18,847 19,001 CentreVenture Development Corporation 13,485 13,980 Solid Waste Disposal 6,643 8,034 Equipment and Material Services 3,267 3,247 Other 57,762 21,977 Unfunded expenses Canadian Museum for Human Rights grant (10,778) (10,756) Environmental liabilities (27,127) (19,980) Accrued employee benefits and other (172,283) (159,947) Total Surplus 231,951 229,094

$ 5,147,663 $ 4,912,508

Invested in tangible capital assets represents equity in non-financial assets, which is either a portion or the entire accumulated surpluses of specific funds consolidated in these statements. For those funds, where a portion of their accumulated surplus is allocated to invested in tangible capital assets, the amount is determined based on tangible capital assets less debt.

68 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 15. Commitments and Contingencies The significant commitments and contingencies that existed at December 31, 2013 are as follows: a) Operating leases The City has entered into a number of lease agreements mainly for the lease of accommodations for civic offices and office equipment. Future minimum lease payments are as follows:

Operating Leases 2014 $ 5,510 2015 4,912 2016 4,737 2017 4,398 2018 4,083 2019 and thereafter 41,794

$ 65,434 b) Legal obligations As part of the normal course of operations, lawsuits are pending against the City. The final outcome with respect to actions that will arise from these lawsuits as at December 31, 2013 cannot be predicted with certainty. Where the occurrence of future events is considered likely to result in a loss with respect to an existing condition and the amount of loss can be reasonably estimated, amounts have been recorded in the consolidated financial statements. c) Loan guarantees The City has also unconditionally guaranteed the payment of principal and interest on capital improvement loans for several organizations. The outstanding balance on these loans as at December 31, 2013 is $7.4 million (2012–$6.6 million). d) Service concession arrangements (i) As disclosed in Note 9d, the City will pay PRW a monthly performance-based maintenance payment related to the Dis- raeli Bridges Project contract. The monthly payment totalling $1.7 million annually is to be adjusted by CPI and is payable commencing October 2012 until the termination of the contract with PRW in October 2042.

(ii) As disclosed in Note 9d, the City will pay DBF2 a monthly performance-based maintenance payment related to the Chief Peguis Trail Extension contract. The monthly payment, totalling $1.4 million annually is to be adjusted by CPI and is payable commencing January 2012 until the termination of the contract with DBF2 in January 2042. e) Veolia agreement On April 20, 2011, the City entered into an agreement with VWNA Winnipeg Inc. (“Veolia”) for the provision of expert advice to the City to assist with construction and operating improvements to the City’s sewage treatment system (the “Program”). The agreement is effective May 1, 2011, and has a term of 30 years, subject to certain termination provisions.

The City’s sewage treatment system treats and handles wastewater and resulting residuals at its existing three major sewage treatment facilities, the South End, West End and North End Water Pollution Control Centres (the “Facilities”). Veolia’s role is to provide services to the City and representatives of Veolia are working collaboratively with representatives of the City providing advice and recommendations to the City in respect of the City’s (i) management and operation of the Facilities for the handling and treatment of wastewater; (ii) assessment, planning and delivery of upgrades and capital modification to the Facili- ties; and (iii) assessment, planning and delivery of operational improvements to the Facilities during the term of this agreement. The Program does not include the City’s supply of water or its waterworks system or work relating to the collection system or land drainage system.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 69 15. Commitments and Contingencies (continued) Under the agreement, the City: retains complete ownership of all the sewage system assets; continues to exercise control over the sewage treatment systems by means of City Council budget approvals and by the setting of service quality standards that will be reported publicly on a regular basis; continues to control operating and maintenance parameters by which the sewage system shall operate; and retains full accountability for compliance with regulatory permits and licenses.

Decisions for the sewage treatment system are to be made by the City based upon the best advice of City management and Veolia experts working together.

The agreement provides both parties with a variety of responsibilities, rights, protections, and obligations reflecting reasonable commercial terms.

Compensation to Veolia under the Agreement includes the following components:

1. Reimbursement of Veolia’s actual direct costs related to the Program (“Direct Costs”);

2. An agreed-upon margin percentage which is applied to Direct Costs of the Program. The quantum of the margin percentage is dependent on the nature of the cost (“Fee”);

3. For operations and capital projections under the Program, a target cost is to be set. Veolia is to receive a share of the savings when actual operating costs and/or capital costs are below target costs (“Gainshare”). Veolia is to receive a share of expense when actual operating costs and/or capital costs are above target costs (“Painshare”); and

4. Key performance indicators (“KPIs”) will be established under the Program. Veolia is to earn amounts for exceeding established KPIs (“KPI earnings”), and to be deducted amounts for failing to achieve minimum KPIs (“KPI Deductions”).

The agreement only guarantees payment to Veolia in respect of the Direct Costs incurred by it in providing services as indicated in Item 1 described in the above paragraph.

Amounts earned by Veolia over the term of the agreement (Fee, Gainshare, and KPI earnings) are credited to an Earning at Risk Account (“EARA”). Painshare and KPI deductions reduce the EARA. All of these amounts are not guaranteed to be paid to Veolia, and by their nature, are dependent on the financial and overall results of the Program.

Veolia’s withdrawals of amounts from the EARA are subject to certain limits and security posting requirements.

If at the end of the 30-year term the EARA is negative, Veolia must repay the City this amount.

The agreement established a Performance Guarantee Security (“PGS”), which is a letter of credit and performance bond that together provide security to the City. In addition to the PGS, Veolia is providing a Parental Guarantee by its parent company.

f) Forgivable loans The City has received funding from the federal and provincial governments for the purchase of certain properties. Repayment of this funding is not required as long as the properties operate as an affordable housing complex or offer services for the home- less. As at December 31, 2013, the forgivable loans totalled $5.7 million (2012–$6.2 million).

70 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 16. Taxation

2013 2012 Municipal and school property taxes $ 985,893 $ 932,410 Payments-in-lieu of property (municipal and school) and business taxes 47,147 42,883 1,033,040 975,293 Payments to Province and school divisions (550,039) (521,322) Net property taxes and payments-in-lieu of property taxes available for municipal purposes 483,001 453,971 Business tax and license-in-lieu of business taxes 56,326 56,783 Local improvement and frontage levies 42,488 42,776 Electricity and natural gas sales taxes 18,995 17,984 Amusement and accommodation taxes and mobile home licence 11,003 16,064

$ 611,813 $ 587,578

The property tax roll includes school taxes of $521.5 million (2012–$495.0 million) assessed and levied on behalf of the Province and school divisions. Payments-in-lieu of school taxes assessed in 2013 totalled $28.5 million (2012–$26.3 million) and are treated the same as school taxes. School taxes and payments-in-lieu of school taxes are remitted to the Province and school divisions based upon a formula and schedule set by the Province. If property taxes are reduced due to an assessment reduction, the City is required by legislation to fund the repayment of both the municipal and school taxes with applicable interest.

Business taxes does not included the amount of levy imposed for business improvement zones of $4.2 million. 17. Sales of Services and Regulatory Fees

2013 2012 Water sales and sewage services $ 235,875 $ 230,040 Other sales of goods and services 129,962 116,201 Transit fares 76,482 72,672 Regulatory fees 65,550 64,426

$ 507,869 $ 483,339

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 71 18. Government Transfers

2013 2012 Operating Province of Manitoba Ambulance, libraries and other $ 62,049 $ 60,822 Building Manitoba Fund 56,604 56,604 Transit 33,534 33,164 Unconditional 19,888 19,888 Support 12,425 11,893 Support for provincial programs (23,650) (23,650) 160,850 158,721 Government of Canada Other 487 254 Total Operating 161,337 158,975 Capital Province of Manitoba Building Manitoba Fund Manitoba Winnipeg Infrastructure Funding 15,100 11,903 Road Improvements 12,935 13,627 Winnipeg Convention Centre 11,518 1,384 Other 14,247 29,716 53,800 56,630 Manitoba Housing Renewal Corporation 5,379 6,557 59,179 63,187 Government of Canada Federal gas tax revenue 46,476 50,577 Other capital funding 25,266 7,498 71,742 58,075 Total Capital 130,921 121,262

$ 292,258 $ 280,237

In accordance with the recommendations of the Public Sector Accounting Board, government transfers, to the extent a liability does not exists, and developer contributions-in-kind related to capital acquisitions are required to be recognized as revenue in the consolidated financial statements in the period in which the tangible capital assets are acquired. 19. Expenses by Object

2013 2012 Salaries and benefits $ 730,133 $ 695,849 Goods and services 376,614 344,217 Amortization of tangible capital assets 198,106 188,432 Interest 54,732 53,587 Other expenses 37,215 17,638

$ 1,396,800 $ 1,299,723

72 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 20. Property and Liability Insurance The City purchases comprehensive insurance coverage for property and liability with a self-insured retention level of $250 thousand per claim for most of the policies. The City has established an Insurance Reserve Fund (Note 14) that enables the City to carry a large self-insured retention level which mitigates the effect of poor claims experience in any given year. 21. Segmented Information The City of Winnipeg is a diversified municipal government institution that provides a wide range of services to its citizens, including police, fire, ambulance, public transit and water. For management reporting purposes the City’s operations and activities are organized and reported by fund. Funds were created for the purpose of recording specific activities to attain certain objectives in accordance with special regulations, restrictions or limitations.

City services are provided by departments and their activities are reported in these funds. Certain departments that have been separately disclosed in the segmented information, along with the services they provide, are as follows:

Protection Protection is comprised of the Police Service and Fire Paramedic Service departments. The mandate of the Police Service department is to ensure the safety of the lives and property of citizens; preserve peace and good order; prevent crimes from occur- ring; detect offenders; and enforce the law. The Fire Paramedic Service department is responsible for providing fire suppression service; fire prevention programs; and training and education related to prevention, detection or extinguishment of fires. It is also responsible for pre-hospital emergency paramedical care and the transport of the sick and injured; for handling hazardous materials incidents; for the mitigation of calamitous incidents; and for the evacuation of people when in charge at an incident.

Community Services The Community Services department provides public services that contribute to neighbourhood development and sustainability through the provision of recreation and leisure services such as fitness and aquatic programs. It provides public services that contribute to healthy communities through partnerships, promotion, prevention, protection and enforcement. The department also contributes to the information needs of the City’s citizens through the provision of library services.

Planning The Planning, Property and Development department provides a diverse bundle of services. It manages urban development for business interests, environmental concerns, heritage matters, local neighbourhoods and the downtown through city planning, community development and parks and riverbank planning. It ensures an acceptable quality of building construction and maintenance of properties through enforcement of construction codes and building standards. It facilitates economic development by providing services for the approval of all land development plans, the processing of building permit applications and the provision of geomatics services, as well as providing cemetery services to citizens.

Public Works and Water The Public Works department is responsible for the delivery of municipal public works services related to the planning, development and maintenance of roadway systems, the maintenance of parks and open space, and street lighting. The Water and Waste department is responsible for land drainage and garbage collection operations.

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 73 21. Segmented Information (continued) Transit System Fund The Transit department is responsible for providing local public transportation service.

Water and Waste Funds The Water and Waste department consists of three distinct utilities–water, wastewater and solid waste disposal. The department provides drinking water to citizens of Winnipeg, collects and treats wastewater, and provides collection, disposal and waste minimization programs and facilities for solid waste. Their land drainage and garbage collection operations are reported in the General Revenue Fund and are included in the Public Works and Water segment.

For each reported segment, revenues and expenses represent both amounts that are directly attributable to the segment and amounts that are allocated on a reasonable basis. Therefore, certain allocation methodologies are employed in the preparation of segmented financial information. The General Revenue Fund reports on municipal services that are funded primarily by taxation such as property and business tax revenues. Taxation and payments-in-lieu of taxes are apportioned to General Revenue Fund services based on the Fund’s net surplus. Certain government transfers, transfers from other funds, and other revenues have been apportioned based on a percentage of budgeted expenses.

The accounting policies used in these segments are consistent with those followed in the preparation of the consolidated financial statements as disclosed in Note 2. For additional information, see the Consolidated Schedule of Segment Disclosure–Ser- vice (Schedule 2). 22. Funds Held in Trust Trust funds administered by the City for the benefit of external parties, which total $0.3 million (2012–$0.4 million), are not included in the consolidated financial statements. 23. Budget On December 17, 2013, City Council approved the 2014 budget for the City of Winnipeg, including operating budgets for tax supported, utility, special operating agency and reserve operations as well as a capital budget. Included in the 2014 budget document is a 2013 consolidated budget (Appendix 11) that considers a number of adjustments for inter-fund transaction eliminations, tangible capital asset based revenues and amortization, controlled entity operations and the accrual of unfunded expenses. The resulting 2013 consolidated budget presented in the budget has been utilized in these consolidated financial statements. 24. Comparative Figures Certain comparative figures have been reclassified to conform to the presentation made in the current year.

74 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 66,610 56,879 653,993 188,432 2012 8,152,533 2,948,908 2,817,355 $ 7,565,150 $ 5,203,625

Totals 24,336 12,042 543,938 198,106 2013 8,672,135 3,134,972 2,948,908 $ 8,152,533 $ 5,537,163

– – – – – 337,607 128,429 209,178 337,607 Assets struction Under Con -

$ $

690 546 32,110 13,348 755,273 214,059 201,257 723,853 541,214 1 Bridges and Other Structures $ $ - 2,896 2,781 39,635 schedule 972,483 106,344 935,629 Under ground 2,903,681 Networks and Other $ 2,800,233 $ 1,931,198

546 517 Infrastructure 79,188 52,564 973,985 921,938 Roads 2,103,307 1,129,322 $ 2,024,665 $

– – 9,232 16,172 840,675 253,041 236,869 831,443 587,634 Facilities Plants and

$ $ 494 494 57,071 21,301 92,801 314,035 113,608 257,458 200,427 Other $ $ – – 7,623 9,837 33,057 148,681 115,624 105,787 141,058 Computer

$ $ 6,982 6,043 27,703 24,117 367,923 188,642 170,568 347,202 179,281 General Vehicles $ $ 2,033 1,661 86,144 21,132 689,823 303,530 284,059 605,712 386,293 Buildings $ $ – – – – 10,695 10,094 211,130 211,731 211,130 Land

$ $ Balance, end of year Balance, end of year Less: Disposals during the year Less: Accumulated amortization on disposals Add: Additions during the year Add: Amortization Consolidated Schedule of Tangible Capital Assets Consolidated Schedule of Tangible As at December 31 (in thousands of dollars) Cost Balance, beginning of year Accumulated amortization Balance, beginning of year of Net Book Value Capital Assets Tangible

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 75 – – 54,732 292,258 507,869 376,614 222,458 611,813 207,318 730,133 235,321 1,619,258 1,396,800 $ $ Consolidated

931 (41,323) (14,628) (52,495) (19,795) (12,921) (50,784) (61,469) (408,720) (612,764) (484,523) (284,477) $ (204,044) $ Eliminations

2 19,955 94,159 55,377 32,951 97,617 15,448 759,833 Other 165,393 330,017 150,309 357,628 200,812 402,205 Funds and $ Corporations

$ – schedule 7,252 49,251 37,753 30,915 60,574 15,550 84,140 34,376 345,050 269,130 101,159 295,799 Water and Water Waste Funds Waste $ $ – 1,041 6,893 19,623 69,556 45,103 80,882 93,602 11,065 45,967 19,432 196,582 176,959 Transit Transit System Fund $ $ – (89) 6,066 12,238 13,385 78,151 37,444 46,842 12,547 14,423 tion 23,767 122,387 122,387 Administra - Finance and $ $ – 9,205 5,900 19,458 19,168 72,211 43,451 10,551 (8,842) 239,010 185,279 121,639 239,010 and Water Public Works Public Works $ $ – 986 793 2,248 3,377 3,426 2,196 44,596 11,211 22,418 15,763 26,774 44,596 Planning $ $ General Revenue Fund – 392 2,404 4,242 8,202 10,218 43,010 76,022 37,197 15,617 19,702 108,503 108,503 Services Community $ $ – 612 8,058 5,347 15,768 70,832 24,758 55,355 34,965 416,061 266,048 350,379 416,061 Protection $ $ (Note 19) Annual Surplus Expenses Transfer from other funds Transfer Other Government transfers (Note 18) to other funds Transfer Salaries and benefits Revenues Taxation Sales of services and regulatory fees Goods and services Interest Other Consolidated Schedule of Segment Disclosure–Service For the year ended December 31, 2013 (in thousands of dollars)

76 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT – – 53,587 197,418 483,339 280,237 587,578 145,987 695,849 344,217 206,070 1,497,141 1,299,723 Consolidated $

9,794 (23,658) (52,480) (43,756) (12,729) (18,091) (49,390) (17,193) (61,528) (469,946) (597,002) (455,027) (573,344) Eliminations $ $ 2 90,521 14,619 84,333 49,788 28,106 86,976 Other 153,670 152,169 319,524 661,166 172,909 169,717 507,496 Funds and Corporations $ $ – schedule 49,299 14,842 36,907 19,109 82,131 35,666 32,328 59,692 94,729 256,549 340,626 291,327 Water and Water Waste Funds Waste $ $ – 1,292 7,370 18,107 45,055 67,418 75,228 89,389 43,324 13,593 17,210 188,993 170,886 Transit Transit System Fund $ $ – 653 4,879 12,969 12,217 11,661 36,300 12,600 70,164 25,060 tion 144,777 103,051 144,777 Administra - Finance and $ $ – 8,546 5,712 (7,177) 19,647 22,359 68,063 12,525 41,950 221,842 165,578 106,481 221,842 and Water Public Works Public Works $ $ – 2,989 2,004 1,908 4,943 1,351 2,987 11,896 45,913 27,116 20,847 15,785 45,913 Planning $ $ General Revenue Fund – 284 2,824 4,279 8,395 10,718 76,910 36,870 16,391 45,710 19,863 111,122 111,122 Services Community $ $ – 8,718 1,382 4,272 65,604 14,500 36,159 52,641 12,785 238,241 379,704 325,106 379,704 Protection $ $ (Note 19) Annual Surplus Expenses Government transfers (Note 18) from other funds Transfer Other Revenues Taxation Salaries and benefits Sales of services and regulatory fees Goods and services Interest to other funds Transfer Other Consolidated Schedule of Segment Disclosure–Service For the year ended December 31, 2012 (in thousands of dollars)

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 77 Consolidated Financial Statements Five-Year Review

December 31 (“$” amounts in thousands of dollars, except as noted) (Unaudited) 2013 2012 2011 2010 2009 1. Population (as restated per Statistics Canada) 699,300 689,300 677,800 669,400 663,000 Unemployment rate (as restated per Statistics Canada) Winnipeg 6.0% 5.6% 5.8% 5.7% 5.5% National average 7.2% 7.3% 7.5% 7.5% 8.3% 2. Average annual headcount 10,143 10,080 10,039 9,942 9,827 3. Number of taxable properties 220,393 218,973 216,997 215,224 213,574 Payments-in-lieu of taxes – Number of properties 1,042 1,317 1,181 1,238 903 4. Assessment (see note) Residential $ 50,851,841 50,738,087 44,052,618 43,431,201 24,048,221 Commercial and industrial 11,843,015 13,310,247 12,054,712 12,033,087 8,242,789 Farm and golf 223,708 244,951 179,736 183,279 128,611 $ 62,918,564 64,293,285 56,287,066 55,647,567 32,419,621 Assessment per capita (in dollars) $ 89,974 93,273 83,044 83,131 48,898 Commercial and industrial as a percentage 18.82% 20.70% 21.42% 21.62% 25.43% of assessment 5. Tax arrears $ 49,592 37,960 34,747 34,387 30,036 6. Tax arrears–per capita (in dollars) $ 70.92 55.07 51.26 51.37 45.30 7. Municipal mill rate 14.600 14.056 15.295 15.295 25.448 Adjustment for tax increase 3.9% 3.5% 0.0% 0.0% 0.0% Adjustment for general assessment 0.0% -11.2% 0.0% -39.9% 0.0% 8. Winnipeg consumer price index (per Statistics Canada) (annual average) 2002 base year 100 122.6 119.9 118.1 114.8 113.9 Percentage increase 2.3% 1.5% 2.9% 0.8% 0.5% 9. Consolidated revenues Taxation $ 611,813 587,578 563,779 550,994 534,571 User charges 507,869 483,339 460,452 425,164 413,243 Government transfers 292,258 280,237 298,086 251,886 256,823 Interest and other revenue 207,318 145,987 147,293 125,812 139,011 $ 1,619,258 1,497,141 1,469,610 1,353,856 1,343,648 10. Consolidated expenses by function Municipal operations $ 994,365 910,177 891,823 851,469 842,003 Public utilities 347,652 338,028 334,154 301,637 278,848 Civic corporations 54,783 51,518 47,257 31,532 29,582 $ 1,396,800 1,299,723 1,273,234 1,184,638 1,150,433 11. Growth in accumulated surplus $ 222,458 197,418 196,376 169,218 193,215

Note: Current provincial legislation requires that a general assessment be performed every two years. A general assessment occurred in 2010 and 2012. In the year of a general assessment, the mill rate is adjusted to offset the effect of market value changes of the entire assessment base.

78 CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT Consolidated Financial Statements Five-Year Review

December 31 (“$” amounts in thousands of dollars, except as noted) (Unaudited) 2013 2012 2011 2010 2009 12. Consolidated expenses by object Salaries and benefits $ 730,133 695,849 664,221 623,232 598,576 Goods and services 376,614 344,217 357,008 324,119 314,746 Amortization 198,106 188,432 175,765 165,857 155,382 Interest 54,732 53,587 43,954 46,233 49,588 Other expenses 37,215 17,638 32,286 25,197 32,141 $ 1,396,800 1,299,723 1,273,234 1,184,638 1,150,433 13. Payments to school authorities $ 550,039 521,322 497,237 497,907 474,445 14. Debt Tax-supported $ 557,781 560,073 334,359 274,838 294,449 Transit 103,936 109,709 110,449 81,408 22,088 City-owned utilities 248,719 296,868 285,799 290,605 288,899 Other 74,848 80,012 70,321 68,238 73,081 Total gross debt 985,284 1,046,662 800,928 715,089 678,517 Less: Sinking Funds 195,237 264,037 242,528 218,687 199,025 Total net long-term debt $ 790,047 782,625 558,400 496,402 479,492 Percentage of total assessment 1.26% 1.22% 0.99% 0.89% 1.48% 15. Acquisition of tangible capital assets $ 543,938 653,993 486,320 333,851 384,110 16. Net financial (liabilities) assets $ (411,063) (325,605) (55,176) 48,603 36,903 17. Accumulated surplus Invested in tangible capital assets $ 4,637,548 4,397,884 4,197,895 3,983,440 3,803,787 Reserves Capital 114,548 114,907 107,716 97,376 98,329 Special Purpose 77,863 90,219 81,981 71,973 81,941 Stabilization 85,753 80,404 85,305 81,582 78,397 278,164 285,530 275,002 250,931 258,667 Surpluses Manitoba Hydro long-term receivable 220,238 220,238 220,238 220,238 226,640 Other surpluses 221,901 199,539 205,043 236,686 230,630 Unfunded expenses (210,188) (190,683) (183,088) (172,581) (170,228) 231,951 229,094 242,193 284,343 287,042 $ 5,147,663 4,912,508 4,715,090 4,518,714 4,349,496 18. Government-specific indicators Assets-to-liabilities 4.79 4.85 5.62 6.00 6.05 Financial assets-to-liabilities 0.70 0.75 0.95 1.05 1.04 Public debt charges-to-revenues 0.04 0.04 0.03 0.03 0.04 Own-source revenues-to-taxable assessment 0.02 0.02 0.02 0.02 0.03 Government transfers-to-revenues 0.18 0.19 0.20 0.19 0.19

CITY OF WINNIPEG 2013 ANNUAL FINANCIAL REPORT 79 Winnipeg Fringe Theatre Festival Information on The City of Winnipeg is available at www.winnipeg.ca. Inquiries may also be directed to 311 | Outside Winnipeg: 1-877-311-4974.

Photo Credits

Moment Factory Tourism Winnipeg COVER, PAGE 19 PAGE 7 Listening Lights Canada Day celebrations photographer Gerry Kopelow/Photographics Inc photo courtesy of the Downtown Winnipeg BIZ Assiniboine Park Culture Days Manitoba photographer Zyron Paul Felix

PAGE 2-3 PAGE 8 glow-in-the-park(ing lot) by Heretical Objects Arts Collective Hockey game near the Forks Nuit Blanche Winnipeg, Culture Days Manitoba 2013 photo courtesy of the Forks North Portage Partnership photographer Gaune Studios Photography PAGE 11 Nature Playground at Assiniboine Park Richard Ray photographer Dan Harper PAGE 4-5 Winnipeg’s skyline PAGE 12 Outdoor movies at Memorial Park photo courtesy of the Downtown Winnipeg BIZ AJ Batac PAGE 4 PAGE 27 Portage Avenue St. Boniface Cathedral-Basilica photographer Zyron Paul Felix PAGE 8 The sun sets over Provencher Bridge Curtis Bouvier PAGE 25 PAGE 11 Autumn leaves in the West Alexander neighbourhood Pedestrians in the downtown

Leif Norman Downtown Winnipeg BIZ PAGE 5 PAGE 15 SnowMAZEing Family Fun Day at Millennium Library Condos on Portage Avenue photographer Kristen Lourie Stan Milosevic Valery Dyck PAGE 5 Transcona Centennial Spray Pad PAGE 16 The Disraeli cycling and pedestrian bridge PAGE 8 City Hall Shaun Babakhanians - Caspian Projects Inc. PAGE 16 James Brittain Photograhy Transit’s new 135,000-square-foot garage PAGE 6 Centre Village Animal Services Agency PAGE 16 Adoptable dog Payton

Art City PAGE 24 Art City WHALE Parade (June 2013) photographer Mandy Malazdrewich

Winnipeg Fringe Theatre Festival PAGE 81 Winnipeg Fringe Theatre Festival photographer Leif Norman